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Kot Addu Power Company Limited (Kapco) sustained a modest decrease in its earnings per share (EPS) for the first quarter of the ongoing fiscal year 2024-25, primarily due to delays in tariff approvals and the lack of a new power purchase agreement (PPA), reports WealthPK.

During the quarter ended September 30, 2024, the company posted a net profit of Rs1.16 billion, registering a slight decrease from Rs1.18 billion during the same period of FY24. The EPS for the quarter stood at Rs1.32, slightly down from Rs1.34 in the previous year. Additionally, the company's operating profit amounted to Rs1.270 billion, mainly driven by income from investments, as there was no revenue from electricity sales following the expiration of the PPA. The company is working to identify a new power purchaser to resume its electricity sales operations.

Kapco is actively pursuing discussions with the National Electric Power Regulatory Authority (Nepra), the power sector regulator, to expedite the determination of a final tariff, which is crucial for the company’s financial recovery. The company is also seeking the establishment of a separate tariff for its switchyard/grid facility, which it continues to operate at the request of the Ministry of Energy. Kapco’s ongoing strategy is to secure stable revenue sources and ensure the sustainability of its operations.

The company has successfully secured a significant portion of its receivables from the power purchaser. As of September 30, 2024, the net receivables due from the power purchaser were Rs1.909 billion, supported by a government guarantee. Additionally, Kapco has made substantial investments in mutual funds, totalling Rs49.678 billion, primarily aimed at meeting working capital needs and funding its growth initiatives. The company is actively exploring a range of investment opportunities to diversify its portfolio.

Water and Power Development Authority, a key shareholder of Kapco, fully supports the company’s diversification efforts and is seeking government approval for them. Though Kapco is currently grappling with regulatory delays and the absence of a new PPA, its solid financial foundation and ongoing efforts to diversify strategically place it in a strong position for future growth. The company remains hopeful about overcoming these challenges, and is actively working to secure a new agreement that will enable it to resume electricity sales and further expand its operations.

Credit: INP-WealthPk