Kot Addu: Kot Addu Power Company Limited (KAPCO) held an analyst briefing today to discuss its fiscal year 2024 performance and strategic plans moving forward, highlighting its ongoing negotiations and strategic shifts amid an expired power purchase agreement (PPA).
According to AKD Securities Limited, KAPCO did not generate any power in FY24 due to its PPA expiring in October 2022, a stark contrast to the 588 GWh produced in FY23. The company is in the process of renewing the PPA for 500MW of its capacity and has applied for a seven-year extension of its generation license, which expired in September 2024.
KAPCO’s 500MW section is included in NEPRA’s power acquisition plan until 2027, recognizing its crucial role in the national grid due to system constraints and its strategic location. In response, KAPCO has filed for a new tariff on a take-or-pay basis for the 500MW capacity. The fate of the remaining capacity is undecided, with possibilities including continuation under a take-and-pay model or dismantlement.
Additionally, the company plans to seek a separate tariff for its switchyard facility, which has been utilized by the power purchaser for the past two years. KAPCO has also invested PkR47 billion in mutual funds aimed at diversifying into green and brownfield projects, although it faced setbacks, such as not securing the Tenaga Generasi wind project.
KAPCO is currently bidding for K-Electric’s solar greenfield projects, aiming for at least double-digit returns on equity for these ventures. The company also plans to export 60,000 tons of furnace oil in the coming months and has implemented a Voluntary Separation Scheme (VSS) to align its workforce with the scaled-down requirements of the 500MW plant.
Management expressed anticipation for the Competitive Trading Bilateral Contract Market (CTBCM) to be operational within the next 1 to 1.5 years, despite delays from issues on the Distribution Companies’ (DISCOs) side, especially concerning the finalization of wheeling charges.
KAPCO emphasized its competitive edge, noting its 47% efficiency rate under the take-and-pay scenario, which surpasses that of its closest competitor, PakGen Power, by a significant margin.