S.KAMAL HAYDER KAZMI,
Research Analyst, PAGE
May 30 - June 5, 2011
Karachi Electricity Supply Corporation (KESC) is the only vertically-integrated power utility in Pakistan and manages the generation, transmission and distribution of electricity. KESC covers a vast area of 6,000 square kilometers and supplies electricity to all the industrial, commercial, agricultural and residential areas that fall under its network. The company provides electricity to 2.1 million customers in Karachi, Dhabeji and Gharo in the province of Sindh and Hub, and Uthal, Vindhar and Bela in Balochistan.
KESC entered into loan agreements in 2007 with the international finance corporation (IFC) and the Asian development bank (ADB) in order to avail long term financing of up to USD275 million to finance the Korangi 220MW and 560MW BQPS power plants. After exhaustive negotiations, IFC and ADB agreed to maintain the loan commitments signed in 2007 and to restructure the loans. This restructuring includes a re-profiling of the repayments, changes to pricing and to the terms of IFC and ADB's equity subscription. The revised shareholders approval was obtained in the EGM of the country held in January 2010 and SECP's approval was granted in June 2010.
FINANCIAL PERFORMANCE JAN-MARCH (RS IN '000)
Indicator FY 2011 FY 2010 Sale of energy net 17346 15216 Tariff adjustment 11,924 9,148 Financial charges 795 1,620 Net Loss for the year (2,302) (4,409) (Loss) per share basic (Rs) (0.10) (0.21)
During the fiscal year July-March 2009-10, the installed capacity of KESC's various generating stations remained at 1,955 MW, against the peak demand of 2,459 MW. During July-March 2009-10, KESC's own generation stood at 5,504 million units (kWh) against 5,837 million units (kWh) during the same period last year thereby showing a decline of 5.7 per cent. Total units available to the KESC's system exhibit an increase of 5.6 per cent during July-March, 2009-10 against the same period last year.
Due to reduction in gas supply during the period, units generated on gas by company's power plants were reduced which adversely affected the overall generation and cash flows of the company, as consumption of expensive furnace oil increased as compared to the same period last year. Total units billed increased by 1.2 per cent (26 GWh), resulting in significant reduction of 3.6 per cent in T&D losses as compared to corresponding period last year. The management is continuing to work towards reduction of T&D losses in a sustainable manner due to the importance of T&D loss reduction for overall turnaround of the company.
The total revenue of the company increased by 20 per cent which was attributed to the increase in total units billed and increases in tariff owing to rising cost of generation and power purchase. Due to the reduction in gas supply to KESC, the overall cost of fuel and power purchase increased 18.53 per cent. Despite external constraints, the overall increase in revenue and reduction in T&D losses resulted in a significant improvement to the bottom line and the net loss for the period reduced from Rs4,409 million to Rs2,302 million.
INDICATORS FY 2011 FY 2010 Units generated (net of auxiliary) 1,258 1,321 Units purchased 1,792 1,856 Total units available for distribution 3,050 3,177 Units billed 2,132 2,106 Transmission & Distribution Losses % 30.1 33.7
Furthermore, massive power load shedding by KESC has rendered thousand of laborers jobless. Prolonged electricity load shedding in Karachi for last few years has badly damaged its economy, The national economy of the country depended on the economy of metropolis and that was why the load shedding was not only affecting the city's economy but also of the entire country. The 10 to 18 hours daily load shedding has caused closure of hundreds of industrial units in eight industrial zones of Karachi which has rendered thousands of industrial workers unemployed. Load shedding is robbing jobs of hundreds of thousands of daily wagers in Pakistan.
Electricity load shedding in Pakistan has increased manifold. It was expected by the government that the electricity load shedding would be done according to time schedule. Government assured that electricity load shedding would finish by the end of the year 2009 but instead it is doubled what it was in the past year. It is big failure of the government of Pakistan. No country can make progress without electricity. Holiday on Saturday and other saving methods had reduced load shedding but not significantly. In Pakistan, senior officers are getting 7,000 units and more free electricity per month. All this free electricity is wasted on numerous air conditioners. KESC is focusing on distribution with main emphasis on the areas of billing and recovery to achieve significant and sustainable reduction in losses.