Only four Wapda power supply companies show profits

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The Audit Report 2010-11 on the accounts of Water and Power Development Authority has shown only four electric supply companies making profit. These are Gepco, Fesco, Iesco and Lesco. The other 10 companies--Pepco, Genco-I Genco-II, Genco-III, Genco-IV, Hesco, Mepco, Pesco, Qesco and Tesco--suffered varying degrees of losses. The Audit Report-2010-11 says that according to balance sheets of the companies, Pakistan Electric Power Company (PEPCO) s loss of Transmission and distribution is 20. 9 percent and receivables of Rs 201. 16 billion; Jamshoro Power Generation Company (GENCO-I) s losses Rs 855. 093 million; Central Power Generation Company Limited (GENCO-II), Rs 1. 963 billion; Northern Power Generation Company Limited (GENCO-III) Rs 2. 938 billion; Lakhra Power Generation Company Limited (GENCO-IV) Rs 3. 587 billion; Multan Electric Power Company Limited (MEPCO) Rs 23. 572 billion; Peshawar Electric Supply Company Limited (PESCO) Rs 60. 683 billion; Quetta Electric Supply Company Limited (QESCO) Rs 35. 37 billion; and Tribal Areas Electric Supply Company Limited (TESCO) Rs 10. 28 billion as on June 30, 2010, while the profit of Faisalabad Electric Supply Company Limited (FESCO) is Rs 1. 904 billion; Gujranwala Electric Power Company Limited (GEPCO) Rs 4. 146 billion; Islamabad Electric Supply Company Limited (IESCO) Rs 5. 093 billion, and Lahore Electric Supply Company Limited (LESCO) Rs 6. 489 billion. The report says that Pakistan Electric Power Company (PEPCO) is facing massive energy losses with rising receivables over several years. Transmission and distribution losses of 20. 9 percent during 2009-10 and receivables of Rs 201. 16 billion as on June, 2010 warrant attention of the management if the objective of improvement of efficiency to bring the distribution companies out of the clutches of financial and operation constraints is to be achieved. Jamshoro Power Generation Company Limited (GENCO-I) accumulated loss increased by 22 percent due to loss of Rs 855. 093 million sustained by the Company during the financial year 2009-10, the audit reports says. The equity position of the Company decreased by 19 percent ie from Rs 4. 288 billion as on June 30, 2009 to Rs 3. 433 billion as on June 30, 2010. The Audit report states that accrued mark-up includes Rs 156 million payable on overdue instalments of foreign relent loans, cash development loans and mark-up of long-term loans. These loans appear under the head Current portion of long-term loan . The instalment of Rs 249 million and interest of Rs 156 million due on June 15, 2010 have not been paid by the company. The report further says that trade and other payable increased significantly by Rs 9. 153 billion (99 percent) from Rs 9. 288 billion as on June 30, 2009 to Rs 18. 44 billion as on June 30, 2010. This was mainly due to increase in creditors of fuel suppliers by Rs 8. 936 billion. The report further says that trade debts increased significantly by Rs 8. 96 billion (118 percent) ie from Rs 7. 571 billion as on June 2009 to Rs 16. 538 billion as June 30, 2009-10. This represents the amount receivable from NTDC on account of sale of electricity. Such a huge receivable amount needs justification, the report adds. About Central Power Generation Company Limited (GENCO-II), the Audit Report states that the Company was suffering losses consistently from the last several years. The Company suffered a loss of Rs 1. 963 billion during financial year 2009-10 and Rs 2. 131 billion during financial year 2008-09 due to which the equity of the company turned negative (Rs 1. 532 billion to Rs 430 million). Long-term loans declined by 33 percent due to repayment, the audit report notes. These loans included foreign relent loans and cash development loan. These loans were allocated to the Company by Wapda which continues to be liable to the Federal Government for principal repayment and interest thereon. Payment against these loans was not made in accordance with the repayment schedule under loan liability transfer agreement with Wapda. The delay in the repayment was due to the circular debt of the Company and these loans will be adjusted against the subsidy available from the GoP. The report further says that trade and payable increased by 24 percent mainly due to increase in creditors by Rs 4. 015 billion. About Northern Power Generation Company Limited (GENCO-III) the Audit Report says that the company suffered heavy loss amounting to Rs 2. 938 billion during the financial year 2009-10 as compared to the loss of Rs 1. 774 billion during 2008-09. This was caused mainly due to increase in miscellaneous expenses by 504 percent over the previous year under administrative and other expenses heads. As a result of loss the profitability ratios remained negative and worsened over the period. The report says that the accumulated profit of Rs 1. 988 billion during financial year 2008-09 was converted into accumulated loss of Rs 949. 765 million as on June 30, 2009-10. Resultantly, the equity of the Company decreased from Rs 19. 88 billion to Rs 16. 95 billion. Further the government was providing continuous support by making the payment of loans on behalf of the company which subsequently adjusted under the head deposit for shares and incorporated in equity of the Company. The report says that long-term loans increased by 415 percent due to a loan of Rs 11. 587 billion which was taken from syndicated banks in which HBL is paying the leading role. This loan was taken for Nandipur combined cycle project. The trade debtors increased by Rs 80. 018 billion due to increase in receivable from CPPA on June 30, 201 on account of sale of energy which leads to the conclusion that the company was facing problems of recovery from CPPA. There was also difference of Rs 4. 910 billion as per company record and the record of the CPPA. The Audit Report says that loans and advances increased by 148 percent due to mobilisation advances given on rental power of Sahiwal, Reshma, Gulf and Samundri of Rs 7. 433 billion. The Company failed to make considerable improvement in its debtors turnover period which increased by 323 days during the year and came to 439 days during 2009-10. About Lakhra Power Generation Company Limited (GENCO-IV), the report says that the company sustained losses amounting to Rs 3. 587 billion from last five years as a result its equity position worsening. Accumulated losses increased by 67 percent over the previous year and reached Rs 3. 58 billion as on June 30, 2010. Long-term loans have decreased by Rs 1. 281 billion. The Company entered into a syndicated finance agreement with National Bank of Pakistan and National Transmission and Dispatch Company Limited on May 9, 2009 to obtain finance of Rs 6. 4 billion. The funds were used to make advance payment under rental service contract with Turkish Company Karkey Karadenize Electik Uretime A. S. Loan agreement includes covenants for payment of mark-up in time and maintaining debt equity ratio at 80:20 all the time but the equity position of the Company is worsening. About Hyderabad Electric Supply Company Limited (HESCO), the report says that the company sustained accumulated losses of Rs 40. 44 billion as on June 30, 2009 in comparison to Rs 42. 608 billion as on June 30, 2008. However, the Company was unable to maintain profitability during the financial year 2009-10. Trade and other payables increased by 64. 61 percent. The said increase was mainly due to increase in amount payable to Wapda and associated undertakings, Neelum Jhelum surcharge has not yet been realised, electricity dues payable and sales tax have also not yet been realised etc. The trade debtors increased by Rs 16. 066 billion ie 83. 49 percent as compared to previous year. The increase showed that the Company failed to improve its recovery position from consumers. About Multan Electric Power Company Limited (MEPCO), the report says it has been suffering losses for several years due to which the equity position of the company has worsened. The accumulated losses reached Rs 23. 572 billion as on June 30, 2010. The Company raised a loan of Rs 1. 295 billion during 2009-10. Peshawar Electric Supply Company Limited (PESCO): The report says the company had accumulated losses of Rs 60. 683 billion as on June 30, 2010 with the result that the negative equity of the company increased to Rs 42. 601 during the year. Long-term loans increased by Rs 696 million ie 166 percent; the store and spares increased by Rs 647 million. The advance, prepayments and other receivable increased significantly by Rs 24. 736 billion. About Quetta Electric Supply Company Limited (QESCO), the report says that the accumulated losses reached Rs 35. 37 as compared to previous year s Rs 32. 656 million. The long-term advance increased by Rs 20. 23 million ie 81. 71 percent. About Tribal Areas Electric Supply Company Limited (TESCO), the report says that the company suffered losses during last several years. As a result of this, the equity position worsened. The accumulated losses reached Rs 10. 28 billion as on June 30, 2010. About Faisalabad Electric Supply Company Limited (FESCO), the report says that the Company earned a profit of Rs 1. 904 billion during 2009-10 and its position of equity was not satisfactory due to heavy losses during 2007-08 and 2006-07; but profit in last two financial years improved the position slightly. The current ratio of the Company is 1:32 as current assets exceed the current liabilities by Rs 4. 988 billion. The report says that long-term financing increased by 54 percent because the Company has obtained long-term loans from Asian Development Bank for power distribution enhancement investment project. The Bank has disbursed $5. 297 million against sanctioned limit of $23. 29 million. The repayment of loan and interest thereon at the rate of 0. 6 percent would, however, start after three years. About Gujranwala Electric Power Company Limited (GEPCO), the report says that the Company earned Rs 4. 146 billion during the financial years 2009-10. The accumulated losses decreased to Rs 4. 797 billion as on June 30, 2010 with the result that the negative equity of the Company decreased from Rs 5. 925 billion to Rs 1. 779 billion. The Company was also carrying huge amount of cash and bank balance ie Rs 1. 078 billion. For the time being, these funds were kept in banks providing highest rate of interest. About Islamabad Electric Supply Company Limited (IESCO), the report says that the equity position of the Company improved by 91 percent over the last year as it earned a profit of Rs 5. 093 billion during the current financial year 2009-10. Its accumulated losses of Rs 27. 73 million turned into accumulated profit of Rs 5. 219 billion. The Company needs to maintain its equity position. About Lahore Electric Supply Company Limited (LESCO), the Audit Report says that the Company earned net profit of Rs 6. 489 billion during the financial year 2009-10 as a result of which its equity position improved. During the financial year 2007-08 and 2008-09 the Company had sustained losses; therefore, shareholders funds and retained earning were insufficient to finance business operation. The Current Ratio of the Company is 1:47 which declined slightly because current liabilities increased more in proportion to current assets. The trade and other liabilities increased by Rs 24. 63 billion ie from Rs 17. 177 billion to Rs 41. 809 billion, out of which Rs 34. 77 billion were payable to Central Power Purchase Agency (CPPA) in respect of purchase of electricity. Non-payment to CPPA reflects financial problems facing the company. The trade debt increased by 91. 86 percent during the financial year 2009-10.

Courtesy : Business Recorder

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