Lahore September 5 2023: Nishat Chunian Power Limited (NCPL) board has recommended not to declare dividend at this moment due to mounting receivables, high cost of borrowing and in the best interest of the company.
The company’s ability to pay dividends depends on the recoverability of the receivables from Power Purchaser. The Power Purchaser consistently failed to make timely payments to the Company, consequently, our receivables have amplified to PKR 13.97 billion with grave uncertainty on the future cashflows from the Power Purchaser. Furthermore, NCPL is relying on the short term borrowings from banks to fund its operations which is extremely expensive due to high borrowing rates. Therefore due to mounting receivables, high cost of borrowing and in the best interest of the company the Board has recommended not to declare dividend at this moment.
During the fiscal year, 2023 turnover was PKR 18.2 billion (2022: PKR 25.42 billion) with an after-tax profit of PKR 3.95 billion (2022: PKR 2.50 billion) and an Earning Per Share (EPS) of PKR 10.77 (2022: PKR 6.82).
During the year ended June 30, 2023, the capacity factor of the plant was 22.52% (2022: 51.47%) with an availability factor of 91.40% (2022: 91.54%) and the Company dispatched 386,127 MWH (2021: 882,443 MWH) to Power Purchaser.
The revenue of the company has decreased due to lower generation demand from Power Purchaser as compared to last year, correspondingly decreasing the cost of raw materials. The thermal efficiency and O&M cost components in our tariff are levelized over 25 years. As maintenance costs in the initial years are low, consequently our profits in the initial years will be higher than the average.
Receivables impact the profitability of the company as under the Power Purchase Agreement (PPA) the Power Purchaser’s default in making timely payments of the invoices entitles the company to Delay Payment mark-up. Since the Power Purchaser is in continuous default of making timely payments therefore Delay Payment markup contributes to the bottom line of the company.