Pakistan Power_Older IPPs at the back of the line, (AKD Daily, Jun 08, 2020) - Corrected
Pakistan Power: Older IPPs at the back of the line
- The release of PKR~201bn in additional stopgap liquidity in the power space completes the disbursement of PkR~400bn over FY19-20 by the current PTI-led Govt. where the widely circulated breakup of recipients (74/3 power generation/T&D companies) resulted in lesser funds for listed names (8/8) directly listed IPPs/holding companies).
- Adding additional descriptive data overlays, we show that 1) clearance for recent CPEC/RLNG projects (cumulative 49.6% of disbursement) has been prioritized, 2) thermal plants receiving higher EPP payments (EPP forming 60/63% of funds distributed to FO/Coal) and 3) no distribution to primary fuel suppliers (PSO, Sui’s) means they have to do with trickle down EPP clearance alone (~PkR14bn or 60% of FO payments are EPP).
- Disbursements deviated from Energy Sukuk I payments where both HUBC and KAPCO were shortchanged (~10-11% if receivables cleared vs. 15% earlier) along with other PP94 & PP02 thermal projects (NPL/NCPL received ~7% vs. ~25% in previous clearance). ENGRO/EPQL/NPL/NCPL received capacity payments transpiring to per share impacts of PkR3.8/2.9/1.9/1.8.
- The committee for negotiation with IPPs has been constituted, which is expected to discuss proposals regarding alleged excess profits earned by IPPs. A broader segment of stakeholders, including regulators, IPPs and energy ministry will have to come to a consensus to enact major policy changes for a sustainable decline in the circular debt levels, in our view.
Hub Power Company is a holding company. Through its subsidiaries, Co. is engaged as a power producer in Pakistan that focuses on developing, owning, operating and maintaining power stations. Co. supplies electricity to Water and Power Development Authority and National Transmission and Despatch Company under long term Power Purchase Agreements for its Hub and Narowal plants respectively.
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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