Hubco, Pakistan’s single largest 1,292-megawatt power plant, reported a profit of Rs1.814 billion, a 14% drop over the same period of last year. CREATIVE COMMONS
KARACHI: Two private power producers announced depressing financial results for the first quarter (July-September) of financial year 2013-14 as production was bogged down by furnace oil supply issues, analysts said.
Hub Power Company (Hubco) and Lalpir Power saw a decline in revenues as an otherwise lucrative business model for the private power producers worked against them because of low capacity utilisation.
Hubco, Pakistan’s single largest 1,292-megawatt power plant, reported a profit of Rs1.814 billion, a 14% drop over the same period of last year.
“Hubco faced problems with its Narowal plant. That’s the main reason we see this decline,” said Shahid Ali, Head of Research at Summit Capital, referring to the company’s smaller 225MW power plant located in Punjab.
Private power producers operate under a strict regulatory regime, which guarantees a fixed rate of return and protection against fluctuation in oil prices.
The power policy allows a certain bonus to the companies if they operate the plants above 75% of capacity. Hubco has benefited from this in the past.
However, delayed fuel supply forced it to operate below that benchmark, resulting in a slide in profit. “This happened despite the income from Laraib Energy being incorporated into the results,” said Ali.
Laraib Energy is a subsidiary of Hubco that runs an 84MW hydropower project in Azad Jammu and Kashmir.
Lalpir incurred a loss of Rs3.67 million against a profit of Rs244 million as it operated at a capacity of around 58% and had to absorb a penalty.
This was because of the age of the plant and a disruption in furnace oil supply.
Under the power policy, companies are supposed to operate plants at a minimum capacity of 60%.
Kot Addu Power
Kot Addu Power Company reported a 2% year-on-year decrease in net profit for the first quarter, mainly because of lower interest income after settlement of a large part of inter-corporate debt, analysts said.
Gross profit also declined as the company carried out maintenance and overhauls, said Global Research.
Published in The Express Tribune, October 25th, 2013.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ