Saif Power Limited (PSX: SPWL) is a relatively new IPP, operating under the 2002 Power Policy, on a Build, Own and Operate basis in Sahiwal District of Punjab, Pakistan. It was incorporated on 11 November 2004 as a public limited company under the Companies Ordinance 1984.
It is a subsidiary company of the Saif Group, a diversified industrial and services conglomerate in Pakistan with huge investments in power generation (Saif Power Ltd), oil and gas exploration (Saif Energy Ltd), real estate (Elite Estate Pvt. Ltd), textile (Saif Textile, Kohat Textile, Mediterranean Textile Company), bio fuel and organic compost (Lahore Compost Ltd), IT and communications (Softech Systems Ltd), and healthcare (Saif Healthcare Ltd).
The plant uses natural gas as the primary source of fuel, and HSD as secondary source of fuel. Saif Power Limited has a combined cycle thermal power plant with a gross capacity of 225 MW. The complex consists of 2 Gas Turbines from GE France and a Steam Turbine from Siemens Sweden. The plant commenced its operations on 30th April 2010 under a 30-year Power Purchase Agreement (PPA) with NTDC, a Gas Supply Agreement (GSA) with SSGC, and a Fuel Supply Agreement (FSA) with Shell.
Shareholding pattern
Majority of the shares at Saif Power Limited (51 percent) rest with Saif Holding Limited (SHL). Headquartered in Islamabad, Saif Holdings Limited (SHL) assumes the business development and investment activities of the Saif Group, and also provides consultancy and other related services to its associated companies. SHL also provides local support and other representative services to leading transnational corporations; it is also the third party sales representative in Pakistan for Motorola Inc. SHL is also the regional service provider in Pakistan, Afghanistan and Central Asian Republics for Iridium Communications Inc., which operates a system of active satellites used for worldwide voice and data communication from hand-held satellite phones and other units.
Over 17 percent of the shares are held by the banks, DFIs and NBFIs, and over 4 percent rest with the general public.
SPWL Performance
A look back at 2015 shows that the year was filled with activity in the power sector. But that was in the coal and renewable segment. The government was seen pushing for coal based power plants, RLNG based power plants, wind power plants, solar power plants and hydel power generation.
During these times, the Saif Power's operational performance in CY15 slipped due to underutilized capacity amid shortage of gas. Utilization on HSD increased significantly from 29 percent in 2011 to 56 percent in 2015, which escalated the cost of operations leading to higher O&M losses for the firm.
2016 was better in terms of dispatch of electricity for Saif Power due to the availability of LNG/gas. Dispatch was 58.79 percent for 2016 as compared to 50.85 percent in 2015. Out of this, LNG/natural gas accounted for 47.43 percent and HSD accounted for 11.36 percent.
SPWL's financial performance has improved steadily with net margins improving from 6.4 percent in 2011 to 19.35 percent in 2016. However, Turnover in 2016 was lower as dispatch was more on LNG/ gas, which is cheaper than HSD; Revenues were down by around 19-20 percent year-on-year in both 2015 and 2016.
Outlook
2017 has turned out to be better for Saif Power Limited so far as the firm saw a significant increase in its turnover. Where revenues were up by 20 percent, year-on-year, its earnings were up by 19 percent in 9MCY17.
However, SPWL had been facing two receivable issues: One, an amount of Rs 477.56 million related to capacity purchase price not acknowledged by NTDCL as the plant was not fully available for power generation, which according to the firm was due to non-availability of fuel owing to non-payment by NTDC itself. The Expert's determination came in favour of the company, but NTDC has challenged this award in Civil Court Lahore.
The second was an amount of Rs 239.68 million relating to capacity purchase price not acknowledged by NTDC. The sole reason for this quoted in the firm's annual accounts was non-supply of gas by SNGPL. The arbitration award in SPWL's favour for an amount of Rs 239.68 million against SNGPL was challenged by SNGPL in Lahore High Court (LHC), which was dismissed in the company's favour. The company had however, filed a petition last year in LHC to obtain decree in lieu of the arbitration award and adjusted the amount of Rs 270.66 million against payables to SNGPL.
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Saif Power Limited - Shareholdings as on 31 Dec, 2016
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Category of shareholder Percentage
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SPONSORS, DIRECTORS, CEO AND CHILDREN 0.005
ASSOCIATED COMPANIES 51.045
Saif Holding Limited 51.045
Saif Textile Mills Limited 0.000
BANKS, DFI AND NBFI 17.474
INSURANCE COMPANIES 1.616
MODARABAS AND MUTUAL FUND 0.358
GENERAL PUBLIC (LOCAL) 4.203
GENERAL PUBLIC (FOREIGN) 0.067
OTHERS 25.232
Total 100
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Source: Company accounts
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Saif Power Limited
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Rs(mn) 9MCY17 9MCY16 YoY
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Turnover - net 10,900 9,057 20%
Cost of sales 8,297 6,685 24%
Gross Profit 2,603 2,372 10%
Administrative expenses 121 102 19%
Finance cost 515 608 -15%
Other income 4 12 -68%
Profit for the period 1,971 1,673 18%
Earnings per share-basic and diluted 5.10 4.33 18%
Gross margins 23.88% 26.19%
Net margins 18.08% 18.48%
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Source: Company Accounts
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