KARACHI – The lingering issue of circular debt has continued to haunt the power sector as the Water and Power Development Authority (WAPDA) is yet to repay at least Rs 88 billion to the Hub Power Company (HUBCO). In addition, WAPDA also failed to provide HUBCO with a Letter of Credit (LoC) worth Rs 12.92 billion, as required under the Power Purchase Agreement (PPA). WAPDA’s inability to clear outstanding dues has rendered the power company with a hefty default of at least Rs 75 billion to P30 for fuel supply, part of which is covered by a Standby LoC worth Rs 8.0 billion provided by HUBCO.
“Our customer, WAPDA, remains unable to meet its obligations to HUBCO in accordance with the Power Purchase Agreement (PPA) which is secured under a sovereign guarantee of government of Pakistan,” a company report unveiled to its shareholders at three stock exchanges of the country.
It said that out of a total Rs 88 billion against WAPDA, some Rs 82 billion were characterised as classified overdue, which need to be paid immediately. “Despite frequent follow-up with the concerned Ministry of the government, it is regretted that there has been no improvement in the situation,” the report lamented. The circular debt issue, the company said, had also dampened supply of fuel – which was “irregular” – further affecting plant operations.
It said that during the last six months (July-December 2010-11), the Hub Plant operated at an average load factor of 71 percent and an average complex availability (ACA) of 85 percent. The company’s turnover, during the said period, was Rs 49.202 billion against Rs 46.168 billion of last year while operating costs stood at Rs 44.954 billion against Rs 42.389 billion of 2009-10, causing a gross profit of Rs 4.246 billion compared to Rs 3.779 billion in the corresponding period of last year.
HUBCO declared a net profit of Rs 2.843 billion, with an earning per share of Rs 2.46 during the period under review compared to a net profit of Rs 2.855 billion and Rs 2.47 earnings per share in the same period last year.
