Pakistan Power: All downhill from here?
- Furnace oil based generation has drastically declined (61% YoY in 11MFY19) as 8,600MW, 60% of pre-expansion capacity, was added to the system over FY17-19. HUBC base plant, Nishat IPPs and Narowal witnessed 30-45 ppt YoY lower dispatch factors during 11MFY19, with HUBC base plant being the worst affected.
- Considering minimal utilization levels, and long brewing capacity trap - capacity payments are likely to increase 57% YoY to PKR1,000bn (2% of GDP) in FY20F – USD hedged returns to FO based IPP have recently come under scrutiny.
- To grapple with this capacity trap, the GoP has initiated an inquiry of certain FO based IPPs (NCPL) allegedly earning excess returns, while also neglecting demands for PPA extension (KAPCO to work on take and pay model post FY21) or coal conversion of existing FO based plant (HUBC).
- Amid this background, HUBC is still our top pick from the sector, given 30% CAGR of earnings over FY18-23, led by the upcoming coal based power capacities. While KAPCO resuming payouts on any further circular debt settlement will be a good opportunity to exit.
Kot Addu Power Co Ltd. Kot Addu Power Company Limited is a Pakistan-based power generation company. The Company's principal activities are to own, operate and maintain a multi-fuel fired power station with approximately 15 generating units with a nameplate capacity of 1,600 megawatts (MW) in Kot Addu, District Muzaffargarh, Punjab, Pakistan. The Company also sells the electricity produced therefrom to a single customer, the Pakistan water and power development authority. The power plant is a multi-fuel gas-turbine power plant using three fuels to generate electricity: gas, light sulfur furnace oil and high speed diesel. The plant's combined cycle technology enables it to use the waste heat from the gas turbine exhaust to produce steam in the heat recovery steam generator, which in turn is used to run the steam turbines.
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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