Engro Powergen Qadirpur’s (PSX: EPQL) latest announced financial performance for 1QCY20 show that the revenues of the power company slipped by 15 percent year-on-year, which was most likely due to lower load factors continuing their way from CY19 into CY20. load factors in CY19 remained lower versus CY18 due to lower demand as well as gas curtailment as the key gas field Qadirpur continues to witness depletion. Revenues however increase in CY19 due to a higher USD indexation and higher gas price.
The decrease in load factor is primarily due to lower merit order ranking and consequently lower dispatches. However, lower power dispatch also resulted in the IPP earning better gross profit for 1QCY20. No significant increase in cost pressure also supported the power company’s bottomline. Restricted growth in administrative and other operating expense lifted operating margins. Whereas, finance income from interest income earned on receivables from for the period versus finance cost last year supported EPQL’s net margins further.
Though profitability has seen improvement, EPQL continues to face the issue of overdue receivable from NTDC and SNGP, which stand at alarming levels. The IPP has been producing electricity on mixed mode with gas and HSD since September 2018 due to decline in supply from Qadirpur field. But EPQL has initiated process of finding a long-term alternate fuel option to replace the expensive HSD.
The company along with other players in the sector will continue to face lower power demand as coronavirus pandemic has brought the economic activity at a standstill. This would lead to lower load factors and hence higher capacity payments - additional burden on the government during these testing times.