Power: Finding it hard to hold on
​CPPA reported generation numbers for Feb/March'17 where 6.38/7.62TwH were generated, shifting -0.2%/+13.1%YoY for the months. The weighted average cost of generation during the months stood at PkR5.18/6.22/KwH up 31/12%YoY marking a general rise in the cost of generation in the PEPCO system. Cumulative 9MFY17 generation amounts to 76.54TwH rising 5.8%YoY, aided in large part by 5.2%/65.2%YoY increases in FO/Nuclear generation, at a total net dependable capacity of 11,812MW (50% load factor on nameplate generation capacity of 23,623MW). Thermal sources for generation supplied ~67% of total units produced where FO/HSD based generation persisted (30.1/1.2%). In a power policy backdrop riddled by long standing, systemic impediments, a one-off payment before summer, is a stop-gap measure at best, kicking the can down the road. Investors agree, as evidenced by the 9.2%CYTD (ex-KEL) decline in the sector's performance, where an investment case for KAPCO on yield (FY17/18F D/Y of 11.9/12.2%) remains compelling, while a 'chink' in NEPRA's tariff setting authority may give long term space to push through lucrative tariff for an extension.
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