KOT ADDU POWER COMPANY LTD (KAPCO)
Research Analyst, PAGE
July 12 - 18, 2010
Kot Addu Power Plant was built by the Pakistan Water and Power Development Authority (Wapda) in five phases between 1985 and 1996 at its present location in Kot Addu, District Muzaffargarh in Punjab.
In April 1996, Kapco was incorporated as a public limited company under the Companies Ordinance, 1984 with the objective of acquiring the power plant from Wapda. The principal activities of Kapco include the operation and maintenance of the power plant. On April 18, 2005 Kapco was formally listed on all three stock exchanges of Pakistan.
PRIVATISATION OF KAPCO
On June 27, 1996 following international competitive bidding by the Privatisation Commission, the management of Kapco was transferred to National Power (now International Power) of the United Kingdom, which acting through its subsidiary National Power (Kot Addu) Limited (NPKAL), bought shares representing a 26 per cent stake in Kapco. Later, NPKAL bought a further 10 per cent shareholding in Kapco increasing its total shareholding to 36 per cent.
The other majority shareholder in Kapco is Wapda with a present shareholding of 46 per cent. Following the successful completion of the Offer for Sale by the Privatisation Commission (on behalf of Wapda) in February 2005, 18 per cent of Kapco's shareholding is now held by the public.
Kapco is Pakistan's largest independent power producer (IPP) with a nameplate capacity of 1600 MW. The power plant comprises of 10 multi-fuel fired turbines and five steam turbines installed in five phases between 1985 and 1996. These turbines are divided into three energy blocks with each block having a combination of gas and steam turbines. The power plant's combined cycle technology enables Kapco to use the waste heat from the gas turbine exhaust to produce steam in the heat recovery steam generator, which in turn is used to run the steam turbines thereby resulting in fuel cost efficiency and minimum wastage.
The power plant is a multi-fuel power plant with the capability of using three different fuels to generate electricity, namely natural gas, low sulphur furnace oil and high speed diesel. The power plant is also the only major plant in Pakistan with the ability to self start in case of a country wide blackout.
The company's turnover during the review period was Rs62,880 million (Rs 52,978 million in Jul 08 - Mar 09) and cost of sales was Rs55,600 million (Rs. 44,942 million in Jul 08 - Mar 09). Profit from operations was Rs9,255 million (Rs11,608 million in Jul 08 - Mar 09) and profit after tax during the review period was Rs3,718 million (Rs4,176 million in Jul 08 - Mar 09). The resultant earnings per share were Rs4.22 per share (Rs10 each)- Rs4.74 per share in July 08 -March 09.
FINANCIAL PERFORMANCE (RS '000)
INDICATOR MARCH 31, 2010 MARCH 31, 2009 Sales 62,879,801 52,977,703 Cost of sales (55,599,526) (44,941,694) Gross profit 7,280,275 8,036,009 Profit before tax 5,718,079 6,420,756 Profit after tax 3,718,132 4,175,648 Earnings per share (Rs) 4.22 4.74
From January 1, 2010 to March 31, 2010, the power plant generated 1,703 GWh of electricity at a load factor of 58.9 per cent and with an overall availability of 67.2 per cent. The fuel mix was 83.5 per cent on low sulphur furnace oil, and 16.5 per cent on high speed diesel. There was no generation on gas.
The company continues to operate and maintain its power plant in accordance with international standards. Major overhaul of two gases and one steam turbine was commenced in February 2010. As per outage plan, hot gas path inspection of two gas turbines was completed and four gas turbines underwent combustion inspections.
IPPS IN PAKISTAN
Private Power and Infrastructure Board (PPIB) is currently processing forty four (44) multiple fuel (oil, coal, gas and hydel) power generation projects with a cumulative capacity of 10,845 MW which are expected to be commissioned from year 2010 to 2017. Furthermore, the following IPPs have been established in 2009?10 and other projects are under construction and will soon be delivering much needed megawatts to the national grid to minimise the demand-supply gap.
Recent shortage of fuel supplies that led to nationwide load shedding of more than 16 hours in a day, brought about the serious issue of debt payments from Kapco and Hubco to PSO. Shortage of fuel supplies constrained the power generation for the country. Intervention of government by paying one billion rupees on behalf of each company restored the situation temporarily. However, the debt issue still remains as the payments from Wapda are yet to be collected.
Such issues would bring upon rampant reactions from the public. The two power companies together have a capacity to produce over 2800 MW of electricity, although they seldom produce more than 2000 MW on a regular basis. Therefore, the companies have to improve their performance in order to meet ever-increasing demand. Future environment could be unsatisfactory not only for Kapco but also other industries that would be heavily affected by the load shedding crisis because of the debt payments by the power generation companies.