| THE KARACHI ELECTRIC SUPPLY CORPORATION LIMITED |
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| (Annual
Report 1997) |
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| Accounts
for the year ended June 30, 1997 |
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| CONTENTS |
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| Names
of Directors, Bankers, Auditors |
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| and
Managing Agents |
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| Notice
of Meeting |
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| Chairman's
Review |
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| Directors'
Report to the Members |
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| Income
and where it went |
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| Historical
highlights |
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| Operating
results of generating stations |
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| Transmission
and Distribution system |
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| Auditors
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Financial Statements |
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| Pattern
of Shareholdings |
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| BOARD
OF DIRECTORS |
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| CHAIRMAN |
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| Mr.
Javed Burki |
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| MANAGING
DIRECTOR (AGENTS) |
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| Mr.
Kamal Afsar |
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| DIRECTORS |
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| Mr.
Mir Hussain Ali |
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| Mr.
Shahmir Khan |
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| Mr.
Raziur Rehman Khan |
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| Mr.
Abdullah Hussain Haroon |
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| Mr.
Muhammad Zubair Motiwala |
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| Mr.
Syed Akhlaq Hussain |
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| Mr.
Fayyaz Ahmad |
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| Mr.
Anzar Hussain Zaidi |
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| Mr.
Jahangir Siddiqui |
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| Mr.
Muhammad Khusrow Khowaja |
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| CORPORATE
SECRETARY |
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| Mr.
Oswald Pearl |
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| BANKERS |
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| National
Bank of Pakistan |
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| Habib
Bank Ltd. |
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| United
Bank Ltd. |
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| Muslim
Commercial Bank Ltd. |
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| Allied
Bank of Pakistan Ltd. |
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| First
Women Bank Ltd. |
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| AUDITORS |
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| Rahim
Jan & Co. |
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| Sidat
Hyder, Qamar Maqbool & Company |
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| MANAGING
AGENTS |
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| The
Pakistan Electric Agencies (Pvt.) Ltd. |
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| REGD. OFFICE |
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| Aimai
House, Abdullah Haroon Road, Karachi. |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the 87th Annual General Meeting of the Karachi Electric
Supply Corporation |
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| Ltd.
will be held at P.N. Fleet Club, Liaquat Barracks, Karachi, on Tuesday, 31st
March, 1998 at 11.30 |
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| hours
to transact the following business: |
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| A.
1. To confirm minutes of the Annual General Meeting held on 27th March, 1997. |
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| 2.
To receive and adopt the Directors' Report and the Audited Accounts (with
Auditors' Report) |
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| for
the year ended 30th June, 1997. |
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| 3.
To elect Directors in place of those retiring. |
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| The
Board of Directors has fixed the number of Directors to be elected U/S 178(1)
of the |
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| Companies
Ordinance 1984 at thirteen. |
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| The
retiring Directors are as under: |
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| Mr.
Kamal Afsar |
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| Mr.
Jahangir Siddiqui |
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| Mr.
Muhammad Khusrow Khowaja |
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| Mr.
Abdullah Hussain Haroon |
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| Mr.
Anzar Hussain Zaidi |
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| Mr.
Raziur Rehman Khan |
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| Mr.
Mir Hussain Ali |
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| Mr.
Shahmir Khan |
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| Mr.
Muhammad Zubair Motiwala |
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| Mr.
Syed Akhlaq Hussain |
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| Mr.
Fayyaz Ahmad |
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| 4.
To appoint Auditors in place of those retiring and fix their remuneration for
1997-98. Retiring |
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| Auditors
viz: M/s. Rahim Jan & Co. and M/s. Sidar Hyder Qamar Maqbool & Co.
being eligible |
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| have
offered themselves for re-appointment. |
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| B.
Special Business |
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| 5.
To consider and if thought fit to pass the following Special Resolutions: |
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| "RESOLVED
that the termination of Managing Agency Agreement between KESC Ltd. and PEA |
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| (Pvt.)
Ltd. w.e.f . March 31, 1998 with mutual consent of both the parties and
without any |
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| compensation/liability
on either part be and is, hereby, approved." |
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| "FURTHER
Resolved that Memorandum & the Articles of Association of KESC Ltd. be
and |
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| are,
hereby, amended/modified to incorporate necessary changes in line with
provisions of the |
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| Companies
Ordinance 1984 in the wake of termination of Managing Agency Agreement as
above." |
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| Any
other business with the permission of the Chair. |
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| Transfer
Books of the Corporation will remain closed from 23.03.1998 to 01.04.1998
(both days |
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| inclusive). |
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| OSWALD PEARL |
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By order of the Board |
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| Corporate
Secretary |
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THE KARACHI ELECTRIC
SUPPLY CORPORATION LTD. |
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| Karachi:
March 03, 1998 |
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| N.B: |
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| i)
The shareholders will please notify change in their address, if any. |
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| ii)
Any member of the company entitled to attend and vote at the meeting of the
company shall be |
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| entitled
to appoint another member, as his proxy to attend and vote instead of him,
and a proxy |
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| so
appointed shall have such rights as respect speaking and voting at the
meeting as are available |
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| to a member. |
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| iii)
This meeting has been called in terms of the extension of the period for
holding of Annual General |
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| Meeting
for the year ended June 30, 1997 granted by the Corporate Law Authority,
Islamabad vide |
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| their
letter No. 19(930)CF/ISS/96 dated 4.12.1997. |
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| iv)
Form of proxy is enclosed. |
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| vi)
Instrument of appointment of proxy and power of attorney or any other
authority under which it is |
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| signed
must be deposited at the registered office of the company at least 48 hours
before the time |
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| of
the meeting. |
|
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| v)
Pursuant to the provision of Sections 80 and 81 of the Companies Ordinance
1984 a member may, |
|
| if
he opts, deposit with the company a nomination conferring on one or more
persons the right to |
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| acquire
the interest in the shares therein specified in the event of his death. |
|
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| vi)
Notice of intention for election for the office of Director must be deposited
at the registered office |
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| of the company at least 14 days before the
meeting. |
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| vii)
A statement under section 160(1)(b) of the Companies Ordinance 1984
pertaining to the special business |
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| is
being sent to the members along with the notice of the meeting and published
accounts. The |
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| proposed
re-drafted Memorandum & Articles of Association of KESC is available at
the Registered |
|
| Office
of the Company for perusal & inspection of the members during office
hours. |
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| STATEMENT
U/S 160(1)(b) OF THE COMPANIES ORDINANCE, 1984 |
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| TERMINATION
OF MANAGING AGENCY AGREEMENT |
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| BETWEEN
KESC LTD. AND PEA (PVT.) LTD. |
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| 1.
A Managing Agency Agreement between KESC and PEA was entered into effective
from 1.4.1991 for |
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| a
period of .10 years expiring on 31.3.2001, whereby M/s. PEA (Pvt) Ltd. were
appointed as Managing |
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| Agents
of KESC Ltd. on payment of Managing Agency Commission as specified in the
Agreement. |
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|
| 2.
The premature termination of the agreement is covered under Section 2(i) of
the Agreement as produced, |
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| hereinunder: |
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| Section
2(i): The compensation payable to the Managing Agents on premature
termination of the |
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| agreement
should be calculated at the rate of one year's average remuneration for every
four years |
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| of
the unexpired period of the Agreement. |
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| 3.
PEA (Pvt.) Ltd., is a company wholly owned by the Federal Government which is
also the major shareholder |
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| of
KESC through its own and its controlled institutions' investment in the
capital of KESC. The Federal |
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| Government
has directed to revoke the above Managing Agency Agreement with mutual
consent of both |
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| the
parties i.e. KESC & PEA. |
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| 4.
The termination of the above necessitates amendment, addition &
modification of a number of Articles |
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| of the Memorandum & Articles of
Association of KESC in line with provisions of the Companies Ordinance |
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| 1984 to ensure its smooth functioning
within the legal framework in the absence of managing agents. |
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| 5.
The Directors have no interest in the special business as narrated,
hereinabove. |
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| CHAIRMAN'S
REVIEW |
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| Ladies
& Gentlemen: |
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| I
welcome you all on the occasion of 87th Annual |
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| General
Meeting of the Corporation. I am pleased |
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| to
present before you the Directors Report, Annual |
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| Accounts
together with the Auditor's Report for the |
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| financial
year 1996-97. |
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|
| During
the year under report the Corporation |
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| suffered
additional financial burden of fuel costs due |
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| to
heavy increase in the price of Furnace oil and |
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| Gas,
inadequate tariff increase, increase in T&D |
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| losses
and higher cost of operation on account of |
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| devaluation
and inflationary pressures. |
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|
| Total
effective installed capacity of power |
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| stations
came down from 1,738 MW to 1,525 MW |
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| due
to non utilization of Duel Fuel station, West |
|
| Wharf
units 8 and 9, Korangi Thermal Power station |
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| units
1 and 2 as they completed their useful economic |
|
| life.
However, the Corporation met the increased |
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| maximum
consumers' demand for Karachi region |
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| of
1,529 MW as against 1,513 MW in the year 1995- |
|
| 96. |
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|
| The
operational results of the Corporation |
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| during
the period under review as compared to |
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| 1995-96
are shown as under: |
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|
1996-97 |
1995-96 |
Percentage |
|
|
MWH |
MWH |
Increase/ |
|
|
|
(decrease) |
|
|
|
% |
|
| 1.
Units generated (KESC) |
|
52,206 |
61,487 |
-7.44 |
|
| 2.
Units sent out (KESC) |
|
21,633 |
42,865 |
-7.26 |
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| 3.
Units purchased |
|
33,905 |
18,117 |
40.64 |
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| 4.
Total available for sale |
55,538 |
60,982 |
-0.06 |
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| 5.
Units billed |
|
3,751 |
57,232 |
-6.33 |
|
|
|
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| Out
of the total generation of 7,458 GWH |
|
|
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| in
1996-97 Bin Qasim Thermal power station |
|
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| generated
5,588 GWH. The overall contribution of |
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| this
station to the KESC system was 74.93%. The |
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| total
KESC generation, however, declined by 7.44% |
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| over
previous year mainly due to increased purchases |
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| of
power from Tapal Energy/WAPDA etc. |
|
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| Out
of the total power requirements, 79.96% |
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| was
generated by KESC's power plants and balance |
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| requirement
of 20.04% was met through power |
|
| purchase
as detailed below: |
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|
1996-97 |
|
1995-96 |
|
|
MWH |
% |
MWH |
% |
|
|
| 1.
Generation by KESC |
52,206 |
79.96 |
61,487 |
85.84 |
|
| 2.
Power purchased: |
|
|
| a) KANUPP |
|
30,901 |
3.14 |
781,429 |
8.33 |
|
| b) WAPDA |
|
52,332 |
13.21 |
58,444 |
4.43 |
|
| c) PASMIC |
|
62,906 |
1.38 |
676 |
1.40 |
|
| d)
TAPAL Energy |
18,838 |
2.31 |
-- |
-- |
|
|
---------- |
---------- |
---------- |
---------- |
|
| Total |
|
33,905 |
20.04 |
18,117 |
14.16 |
|
|
---------- |
---------- |
---------- |
---------- |
|
| Total
generation + |
|
|
| power
purchase |
20,576 |
100.00 |
14,068 |
100.00 |
|
|
---------- |
---------- |
---------- |
---------- |
|
| TRANSMISSION
& DISTRIBUTION LOSSES |
|
| T&D
losses have been worked out at 35.53% |
|
| for
the year 1996-97 as against 31.20% in 1995- |
|
| 96. |
|
|
| For
reduction of T&D losses, strict campaign |
|
| against
unauthorized use of electricity and theft |
|
| through
"Kunda system" is being carried out. The |
|
| Corporation
is yet to succeed in its efforts towards |
|
| total
elimination of this menace. In addition to this |
|
| the
programme for Augmentation and Rehabilitation |
|
| of
Transmission and Distribution System is also in |
|
| progress. |
|
|
| REVENUE
AND EXPENDITURE |
|
| The
financial year under review shows a |
|
| decrease
of Rs. 49.02 million in total revenue and |
|
| increase
in expenditure by Rs. 6,261.46 million in |
|
| total
expenditure over previous year as summarized |
|
| below: |
|
|
Percentage |
|
|
Rs. Million |
|
Increase/ |
|
|
1996-97 |
1995-96 |
(decrease) |
|
| Income: |
|
| -
Revenue from |
|
| sale
of energy |
|
15,796.78 |
15,988.04 |
(1.20) |
|
| -
Other income |
|
493.64 |
351.40 |
40.48 |
|
|
---------- |
---------- |
---------- |
|
|
16,290.42 |
16,339.44 |
(0.30) |
|
|
---------- |
---------- |
---------- |
|
| Expenditures: |
|
| -Cost
of fuel & |
|
| power
purchase |
|
14,424.76 |
9,096.99 |
58.57 |
|
| -
Depreciation |
|
1,719.23 |
1,642.50 |
4.67 |
|
| -
Additional depreciation |
|
-- |
1,200.78 |
-- |
|
| - Interest |
|
2,112.35 |
1,793.36 |
17.79 |
|
| -Provision
for |
|
| doubtful
debts, Fire |
|
| insurance
and bills |
|
| pending
corrections |
|
1,438.03 |
513.68 |
179.95 |
|
| -
Other expenses |
|
3,375.40 |
2,561.00 |
31.80 |
|
|
---------- |
---------- |
---------- |
|
|
23,069.77 |
16,808.31 |
37.25 |
|
|
---------- |
---------- |
---------- |
|
| Net Loss |
|
-6,779.35 |
-468.87 |
1,345,89 |
|
|
---------- |
---------- |
---------- |
|
|
| The
revenue reduced due to increased |
|
| allowances
of Rs. 2.94 billion which were passed |
|
| during
the year 1996-97 on account of excess |
|
| billing
in previous years. |
|
|
| Increase
in fuel cost is due to the fact that |
|
| the
furnace oil price which was Rs. 2,677.60 per |
|
| metric
ton as on 27.10.1995 was raised to Rs. |
|
| 6,276
per metric ton on 30.6.1997. Gas price was |
|
| also
increased from Rs. 84.05 per Mcf as on |
|
| 15.5.1996
to Rs. 98.05 per Mcf as on 30.6.1997 |
|
| i.e.
134.39% fuel prices and 16.67% increase in |
|
| gas prices. |
|
|
| KESC was allowed
increase in additional |
|
| surcharge
on all categories of consumers with |
|
| effect
from 10.10.1996 by 1.43% and from |
|
| 27.4.1997
by 15%. The insufficient increase in |
|
| tariff
rates could not meet heavy increase in prices |
|
| of
fuel. The overall average increase in tariff works |
|
| out to 5.50%. |
|
|
| CONSUMERS
SERVICES: |
|
| The
installation of Personal Computers in each |
|
| Billing
Zone has significantly improved the services |
|
| to
consumers. Consumers complaints regarding |
|
| incorrect
bills are now quickly processed and |
|
| rectified
at the spot if no field survey is required. |
|
| The
facility of computerized duplicate bills is also |
|
| available
to the consumers at all Billing Zones |
|
| and
Awami Markaz. |
|
|
| Billing/Distribution
Departments have been |
|
| re-organized
and they are now functioning in 20 |
|
| Zones.
Each zone is taking all decisions concern- |
|
| ing
its operations, consumers service complaints |
|
| and
billing etc. The Deputy CBs/SEs have been |
|
| made
responsible for proper functioning of their |
|
| respective
zones and designated as Zonal |
|
| Managers. |
|
|
|
|
| The
number of new connections provided |
|
| during
the year under report were 7,738 as |
|
| against
17,696 during the last financial year. |
|
|
| ON
GOING PROJECTS: |
|
|
| 210
MWB in Qasim Thermal Power Station |
|
| Ext,
Unit-6 Project: |
|
|
| During
the year under review an overall |
|
| progress
of 98.46% was achieved towards the |
|
| testing
and commissioning activities of 210 MW |
|
| Unit-6
at Bin Qasim. However, the unit is under |
|
| onload
testing as per manufacturer's recommen- |
|
| dations. |
|
|
| Private
Power Projects on KESC's Grids: |
|
|
| Tapal
Energy, Gul Ahmad Energy and Sabah |
|
| Shipyard
are the three private power projects on |
|
| KESC
system which after achieving the financial |
|
| close,
have entered the construction phase. |
|
| Progress
achieved by them during the year ending |
|
| June
30, 1997 is as under:- |
|
|
| 1.
Tapal Energy Project: |
|
| The
project is based on diesel engine |
|
| technology
using furnace oil. The net capacity |
|
| of
the project is 125.475 MW and the same |
|
| is
located on the Hub River Road, west of |
|
| Karachi. |
|
|
| The
project was put on commercial operation |
|
| on
20th June, 1997 and the Plant is supplying |
|
| 125.475
MW power to KESC. |
|
|
| 2.
Gul Ahmad Energy Project: |
|
| This
project is also a diesel engine based |
|
| plant
using furnace oil. The net capacity of |
|
| the
project is 128.5 MW and it is located |
|
| in
the Korangi Industrial area of Karachi. |
|
|
| KESC
has provided the interconnection |
|
| facility
to the project on the scheduled date. |
|
| The
project has been commissioned and put |
|
| on
commercial operation on November 03, |
|
| 1997.
Since then the plant is supplying 128.5 |
|
| MW
power to KESC. |
|
|
| 3.
Sabah Shipyard Project: |
|
| It
is a barge mounted combined cycle project |
|
| based
on furnace oil. The net capacity of |
|
| the
project is 273.6 MW and it is located |
|
| at
Ibrahim Hyderi Goth, Korangi Creek, near |
|
| Korangi
Thermal Power station. |
|
|
| The
project has achieved a progress of 46% |
|
| by
the end of the reporting year. The |
|
| commercial
operation date of the project was |
|
| November22,
1997, however, keeping in view |
|
| the
pace of work, it is expected that the |
|
| project
completion may be delayed by about |
|
| fourteen
months. |
|
|
| KESC
5TH POWER (SECTOR LOAN) PROJECT: |
|
|
| A.
132/11KV CONVENTIONAL GRID STATIONS |
|
| Work
continued on this project and overall |
|
| completion
of 91% has been achieved by |
|
| the
end of December 1997. |
|
|
| Against
this project new 132KV, 31.5/40 MVA |
|
| transformers
were commissioned at Orangi |
|
| Town
(2 Nos), Gulshan (1 No.), Defence |
|
| (2
Nos), Lyad (1 No.) and Jacob Lines (1 |
|
| No)
during the period under review thereby |
|
| relieving
the existing overloaded transform- |
|
| ers
and providing flexibility in Icad transfer- |
|
| ence. |
|
|
| The
work relating to upgradation of 66KV |
|
| Malir
to 132KV and extension of 132/12KV |
|
| 31.5/40
MVA transformer bays at Civic |
|
| Centre
(2 Nos) have been completed. |
|
|
| B.
220/132KV GIS GRID STATIONS. |
|
| The
installation work of Korangi West 220KV, |
|
| Korangi
West 132KV, Queens Road 132KV, |
|
| Baldia
220KV and Valika 132KV is almost |
|
| complete.
Except for Queens Road 220KV |
|
| the
other grid stations are in commissioning |
|
| stages.
The 220/132KV, 250MVA auto trans- |
|
| former
has already been energized at Baldia |
|
| Grid
station which has greatly stabilized the |
|
| 220KV
transmission line network. |
|
|
|
|
| C.
UNDERGROUND CABLES: |
|
| There
are six cable routes namely 132KV |
|
| Lyari-Site,
Garden East-Jacob Lines, Site- |
|
| II
Iccp from Liaquatabad- Site GT to Site, |
|
| Korangi
West Iccp (220KV) and Malir - CAA |
|
| Iccp
against this project. An overall erection |
|
| of
83% has been achieved whereas work |
|
| on
132KV Lyari-Site Gas Turbine Power |
|
| station,
Garden East and Malir-CAA Iccp |
|
| have
been completed in July 1997. |
|
|
| KESC
6TH POWER (SECTOR LOAN) PROJECT |
|
|
| 220/132KV
OVERHEAD TRANSMISSION LINES: |
|
|
| There
are 18 overhead Transmission Lines |
|
| against
the project. Work on 132KV interconnec- |
|
| tion
of Tapal Power Plant and Gul Ahmed Power |
|
| Plant
including BOC plant Iccp has been com- |
|
| pleted.
The foundation work on Pipri-Gharo site |
|
| Naz-Valika,
Baldia, Mauripur-West Wharf lines are |
|
| in
advance stages. |
|
|
| ENERGY
SECTOR LOAN PROJECT: |
|
|
| 1.
Lyari Grid Station 132KV: |
|
| On
completion of work on 132KV under- |
|
| ground
cable from Lyari to Site Gas Turbine |
|
| Power
station, Lyari Grid Station has been |
|
| energized
with the commissioning of this |
|
| station
the power supply position in Lyari |
|
| and
Old Town areas will greatly stabilize. |
|
|
| 2.
Site-II Grid Station 132KV: |
|
| After
completion of the Civil Work, erection |
|
| work
has now been taken in hand. |
|
|
| 3.
Surjani Town 132KV: |
|
| The
civil work is in progress. |
|
|
| PERSONNEL: |
|
| The
relationship between the Management |
|
| and
CBA remained cordial which helped to |
|
| overcome
various administrative and fiscal prob- |
|
| lems.
It is hoped that the future relationship will |
|
| help
to achieve our goal of improvement and better |
|
| services
to the consumers. |
|
|
| CONCLUSION: |
|
| I
am thankful to all the participants who have |
|
| spared
their valuable time to be present today. |
|
| I
assure you that all possible efforts will be made |
|
| to
restore the confidence of the consumers and |
|
| Shareholders
of KESC through your co-operation |
|
| and support. |
|
|
| I
am thankful to my colleagues and members |
|
| of
KESC Board of Directors for their co-operation |
|
| extended
to the Corporation. I am also thankful |
|
| to
the Ministry of Water & Power, Ministry of |
|
| Finance
and Economic Affairs and Planning |
|
| Division
for their valued assistance. I am also |
|
| thankful
to the Provincial Government of Sindh |
|
| and
Balochistan and local Authorities for their |
|
| co-operation. |
|
|
JAVED BURKI |
|
|
Chairman |
|
|
| Directors'
Report to the Members |
|
| 1.
The Board of Directors present herewith Eighty Fifth Annual Report on the
working of the |
|
| Corporation
together with Audited Statement of Accounts for the year ended June 30, 1997. |
|
|
| (i)
Strict measures have been taken to reduce overtime which is being monitored
through Overtime |
|
| Control Committee. It is expected that as a
result of strict measures, overtime levels will come |
|
| down appreciably. |
|
|
| (ii)
To check the T&D losses, KESC has embarked on a very aggressive campaign
to wipeout |
|
| illegal connections, reduce pilferage and
recover outstanding from the consumers. For this |
|
| purpose, special task forces have been
setup under a serving Brigadier of Pakistan Army who |
|
| has been assigned to KESC by the Federal
Government. |
|
|
| 2.
FINANCIAL RESULT |
|
(Rs. in thousands) |
|
| From
the statement of Accounts it will be observed |
|
| that
after meeting all operation and administrative costs |
|
| including
depreciation, but before provision for taxation, |
|
| the
accounts show a loss of |
|
|
(6,779,345) |
|
| From
which must be deducted provision |
|
|
|
| for
taxation -- for the year |
|
turnover |
(80,318) |
|
|
|
deferred |
1,253,726 |
1,173,408 |
|
|
|
---------- |
|
| (Loss)
after taxation |
|
|
( |
