KARACHI, Nov 13: The Karachi Electric Supply Company (KESC) suffered a pre-tax loss of Rs15.752 billion for the year ended June 30, 2008 after meeting all operational and administration costs, including depreciation and tariff subsidy from the government.

According to the annual report available on the company’s website, the utility posted an after tax loss of Rs16.071 billion which brought forward the total losses to Rs50.865 billion during the year under review from Rs34.793 billion in 2007.

The report shows that this huge loss also included Rs38.507 billion as trade and other payables in 2008 as against Rs22.098 billion in 2007. The report says that the last addition in generating capacity of KESC was made in 1997 when BQPS unit-6 of 220 MW was commissioned. However, another 830 MW power plant at BQPS was approved in June 2006, but awarding of the contract could not be finalised.

Although there is a marked depletion in its generation capacity, the report claims achieving 11.7 per cent increase in generation at BQPS which was partly offset due to reduced generation at KTPS, SGTPS and KTGTPS due to short supply of gas, outages and de-commissioning of KTPS Unit-1.

The report says revenues have gone up by 11.07 per cent due to collective impact of 2.2 per cent increase in sales, enhancement of average selling rate by 7.5 per cent and 10 per cent on account of tariff increase allowed by Nepra from February 24, 2007 and March 1, 2008 respectively and favorable sale mix.

However, the report notes that the increase in revenues was more than offset by phenomenal increase in fuel bill by 25.47 per cent outbalancing 2.2 per cent increase achieved in units billed.

According to the report the cost of power purchases increased by 11.91 per cent despite 2.7 per cent reduction in number of units purchased due to steep rise in furnace oil price during the period under review.

It also refers to the failure on the part of O&M contractor, Siemens, in achieving the main objective to transform the company into a profitable entity within two years is evident from the level of T&D losses which continued to be in the alarming zone of 34 to 35 per cent.

The annual report also refers to commitment for equity injection of Rs6 billion through Redeemable Preference Shares (RPSs) by the KES Power (74.1 per cent) and GOP (25.65 per cent) to finance equity component of cost of new power plants.

It also claims that financing facilities from local and international lenders for enhancing generation capacity through setting up of new power plants could only be managed with the sponsors support and their corporate guarantees.

Meanwhile, General Secretary of the KESC Shareholders Association Ch Mazhar contested the claims of the new owners and said the report represented their failure in making the company profitable in three years, as they had promised.

He claimed that price of the utility’s stock had plunged to Rs3.80, line losses had gone up to 38 per cent and the company, according to him, was going down the drain. He also opposed the move to approve amendment in the Article 69-A, allowing meetings of the board of directors and committees of directors in emergent situations may be held through tele/video conferencing pursuant to such conditions and guidelines specified by SECP from time to time.”