KARACHI, Aug 8: The Karachi Electric Supply Corporation (KESC) posted net profit for the financial year June 30, 2012 at Rs2.6 billion, which translated into earning per share (eps) at Re0.11. It represented a complete turnaround from net loss of Rs9.4 billion or loss per share at Rs0.39 the previous year.

The results were announced at the stock exchange at nearly the fag end of trading session. The sudden surge in fortune for the power utility, gave investors a pleasant shock.

Over the years, consumers and investors have loved to hate the power utility that doesn’t provide uninterrupted power to consumers and instead of disbursing dividends has kept asking shareholders for cash in right issues as a matter of yearly ritual.

The results were, therefore, greeted warmly by the investors, who carried the price of the KESC stock up by 81 paisa to Rs4.49 on a huge turnover of 18 million shares. The volume of business in the KESC stock accounted for nearly a quarter of all shares traded at the bourse on Wednesday.

The accounting figures showed that earning before interest, tax, depreciation and amortisation (EBITDA) amounted to Rs17 billion and reflected five-fold rise from Rs3.5 billion the previous year.

A cursory glance at the figures showed that the major item that pushed the utility into profitability was the ‘tariff adjustment’ that shot up by to Rs70 billion for the latest year, from Rs45 billion last year.

Revenue grew to Rs93 billion, from Rs86 billion. Expenses incurred in generation, transmission and distribution were lower by Rs1 billion to Rs13 billion for 2012, from Rs14 billion last year, which could allude to a slight reduction in Transmission and Distribution (T&D) losses that has been the bane of business for the power utility.

In a statement released by the KESC, CEO Tabish Gauhar seemed to exude enthusiasm: “Seven years after privatisation, KESC has achieved an important milestone of becoming a profitable entity.”

The power utility chief stated that during the seven years, KESC had witnessed “an unprecedented $one billion shareholders equity investment, major overhauling of its technical resources, wide ranging capacity, efficiency improvements and an effective management.” He contended that those much needed interventions had enabled KESC to get back on the sustainability track.

Gauhar conceded that the profit of Rs2.62 billion seemed insignificant when compared with the financial investments made.

Yet, he said, it represented a step towards ‘sustainable future’.

The CEO observed that during the last few years, KESC was successful in arranging substantial funds for its development project from IFC, ADB, OEKB and other local financial institutions.

“That coupled with the capital injection has enabled KESC to add over 1000 megawatts of new and efficient generation capacity and significantly enhance its transmission and distribution capacities,” he said, but made a claim that at least the consumers were likely to take with disdain: “Efficiency gains have really helped the company improve its operating performance over the last few years.”

Gauhar said that the jump out of the red was significant as lenders, investors and business partners would have greater faith in KESC’s ability to deliver. And that in turn would help KESC position itself favorably in the investors’ community and help the utility generate funds for future mega projects.

Gauhar identified those projects as coal conversion and new coal fired projects. But the best of the statement was in the end: “We will continue to focus on reduction in cost of generation, reduction in distribution losses and improvement in our quality and service to our customers,” the KESC CEO said.