Engro Powergen Qadirpur Limited (PSX: EPQL) announced its annual financial performance for the year ended December 31, 2018 last week. The company’s revenues have remained almost the same for the past three years. The company is a combined-cycle power plant with 1+1+1 configuration; which includes one gas turbine, one heat recovery system generator (HRSG), and one steam turbine. It uses permeate gas as its primary fuel source and high speed diesel (HSD) as backup fuel to convert into electricity.
The company’s profitability has risen steadily over the years amid stable revenues. After EPQL plant came back online from a forced outage due to a fault in the gas turbine generator rotor back in 2013, margins for the company saw improvement due to better operations. Its sales grew by around 29 percent, while the bottom-line was up by 39 percent, year on year.
However, in CY15, the bottom-line slipped by 11 percent year-on-year despite a healthy growth in revenues. At work was lower demand owing to grid issues at the power purchaser’s end and a higher planned outage for a major inspection activity.
Again in CY16, the company’s revenues dipped by around 14 percent year-on-year due to the NTDC’s transformer catching fire. Since then, the revenues have been maintained.
The CY17 saw improved load factors and increasing profitability due to reduction in finance cost and higher absorption of operation & maintenance costs on account of increased demand.
The company faced supply disruptions again in 2018 on account of the gas supplier’s compressor issues, which resulted in lower load factors for the company. The firm’s revenues remained stable, while the bottom-line was up by 10 percent in the latest annual year performance. Significant decline in finance cost and no growth in cost of sales supported the profits and margins for CY18.
EPQL has a Gas Supply Agreement (GSA) with SNGPL, for supply of permeate gas from the Qadirpur gas field. As this supply of gas depletes over time, EPQL is protected from the effects of gas depletion as its agreement allows it to co-mingle fuel i.e. operate the plant on both gas and diesel.
The firm is now facing gas curtailment from the Qadirpur gas-field and has made its plant available on mixed mode from September 7, 2018 onwards.
According to the firm, it has commenced work on finding a long-term alternate fuel option.
It must be noted that once gas curtailment reaches a certain point, EPQL is allowed one-time conversion to an alternate fuel, and the cost of this conversion is fully recoverable from the power purchaser as per the Implementation Agreement. At the same time, EPQL is entitled to recover full capacity payments while making the plant available on mixed mode.
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