Engro Powergen Qadirpur Limited (PSX: EPQL) a subsidiary of Engro Energy Limited and formerly known as Engro Powergen Limited (EPL) announced its financial performance for 2020 yesterday with a dividend announcement of Rs1.75 per share in addition to interim cash dividend for 1HCY20 of Rs1.25 already paid.

EPQL’s earnings for 2020 were weaker than 2019; the IPP’s bottomline contracted by 39 percent year-on-year, which emanated from an equal percentage decline in the topline (39% YoY). The decrease in sales revenue is partially attributable to lower power dispatch in CY20, which was due to lower electrical output as demand remained constrained during the year. Decline in offtake from the power purchaser came on the back of lower demand for power due to COVID-19 lockdown as well as the merit order position. While the figures for CY20 power dispatches are not available, EPQL’s load factor was 32 percent in 9MCY20 versus 70 percent in 9MCY19.

EPQL’s third quarterly report also highlights that the decrease in sales revenue in 2020 is attributable to debt servicing component of tariff no longer being applicable from March 27, 2020 as the company has fully repaid its long-term debt.

Despite no significant increase in cost pressure as well as notable growth in other income and finance income earned on receivables in 2020 versus finance cost in 2019, EPQL’s earnings remained lower.

Receivables have been a key issue for the IPPs and the larger circular debt problem. The governemnt and the IPPs have decided on a solution with regards to settlement of overdue receivables. However, for EPQL which comes under power policy 2002, the new MoU signed between the IPP and the government for reduction of RoE, late payment surcharge and sharing of efficiency gains might not bring significant impact.