KESC expects Rs1.5b revenue increase
Distributor to shift to cheaper fuels from costly furnace oil.
KARACHI:
The Karachi Electric Supply Company (KESC) expects to increase revenue by Rs1.5 billion annually by reducing line losses by three per cent every year.
KESC, the country’s leading power utility, announced this while presenting its accounts and strategy to analysts on Thursday.
Earlier, the company had managed to reduce net losses by 65 per cent to Rs3.1 billion in the first half of fiscal 2011 from a loss of Rs8.9 billion in the same period last year. This is primarily due to a decline in transmission and distribution losses from 34 per cent last year to 31 per cent, said Topline Securities analyst Nauman Khan. The management is also focusing on improving its fuel mix by switching from costly furnace oil to coal, liquefied natural gas and bio-gas, informed Khan.
Currently, the cost of generating electricity from oil is Rs15 per kilowatt hour while the cost of generation from gas is approximately Rs5 per kilowatt hour, said Khan in a research note.
The company is also concentrating on increasing power generation as the Port Qasim plant of 560 megawatts is on track to come online by fiscal 2012.
Plan B for cutting costs
The recent employee lay-off plan through the Voluntary Separation Scheme was one of the strategies to reduce cost but it backfired. KESC had planned to lay off 4,000 surplus workers, but the plan was taken back after strong protests and government intervention.
The company is also looking to reduce administrative cost which swelled by 21 per cent to Rs4.9 billion during the period under review.
The company is focusing on retaining its core technical staff while outsourcing other support functions, said Khan. It is working on alternate strategies just to retain core technical staff, concluded Khan.
Published in The Express Tribune, March 12th, 2011.
The Karachi Electric Supply Company (KESC) expects to increase revenue by Rs1.5 billion annually by reducing line losses by three per cent every year.
KESC, the country’s leading power utility, announced this while presenting its accounts and strategy to analysts on Thursday.
Earlier, the company had managed to reduce net losses by 65 per cent to Rs3.1 billion in the first half of fiscal 2011 from a loss of Rs8.9 billion in the same period last year. This is primarily due to a decline in transmission and distribution losses from 34 per cent last year to 31 per cent, said Topline Securities analyst Nauman Khan. The management is also focusing on improving its fuel mix by switching from costly furnace oil to coal, liquefied natural gas and bio-gas, informed Khan.
Currently, the cost of generating electricity from oil is Rs15 per kilowatt hour while the cost of generation from gas is approximately Rs5 per kilowatt hour, said Khan in a research note.
The company is also concentrating on increasing power generation as the Port Qasim plant of 560 megawatts is on track to come online by fiscal 2012.
Plan B for cutting costs
The recent employee lay-off plan through the Voluntary Separation Scheme was one of the strategies to reduce cost but it backfired. KESC had planned to lay off 4,000 surplus workers, but the plan was taken back after strong protests and government intervention.
The company is also looking to reduce administrative cost which swelled by 21 per cent to Rs4.9 billion during the period under review.
The company is focusing on retaining its core technical staff while outsourcing other support functions, said Khan. It is working on alternate strategies just to retain core technical staff, concluded Khan.
Published in The Express Tribune, March 12th, 2011.