Enemalta expects to halve its losses this year

Enemalta this year expects to halve its losses to Lm5.5 million after tax from Lm10.6 million in the year up to last September, the corporation's financial estimates show.

The original estimates for 2004 had projected a loss of Lm5.1 million, but the Electricity Division ended up with a loss of Lm10.2 million instead of a projected loss of Lm3.7 million; the Petroleum Division made a profit of Lm8.2 million, from a projected Lm6.8 million while the Gas Division saw a loss of Lm1.08 million, slightly higher than a projected loss of Lm948,000. Losses by head office amounted to Lm2.7 million.

During the current year the Electricty Division is projected to lose Lm15.7 million, largely due to the increase in fuel costs. "This matures notwithstandng the fuel surcharge (Lm5.8 million) the recovery of VAT from business consumers (Lm1.4m) and reduction in the level of theft by three per cent from 17.77 per cent to 14.77 per cent, giving added income of Lm2.2 million" the corporation said.

Fuel prices were calculated on the basis of spot prices on November 5. The corporation's total cost of fuel this year is projected to reach Lm47.7 million, from Lm40 million last year.

The estimates show that head office is this year expected to make a loss of Lm612,000. The corporation said the projection included a reduction of overtime by 37.5 per cent, although it acknowledged that achieving this target would be "very difficult." Similar projections for overtime cuts are also made for the other divisions.

"Initial indications are that a manpower restructuring exercise at head office can save Enemalta Lm250,000, of which only Lm50,000 are included in the estimates."

The Petroleum Division is projected to make a gross profit of Lm17.2 million (from Lm16.5m this year) . The corporation said the improvement over last year's estimates was even more pronounced probably because last year's estimated profits from this division were understated.

The price of kerosene was increased to match the price of diesel as announced in the budget.

The Gas Division is projected to make a loss after tax of Lm743,800 this year.

The corporation said an increase of two per cent in volume to 18,100 tons was forecast, giving sales of Lm3.04 million at current prices.

"Due to the increase in product costs, the division barely breaks even at gross profit level. When one considers commissions payable to gas distributors, losses are already being made. Basically, the more the Gas Division sells, the more money it loses."

"At current product cost levels, the selling price of gas has to be revised significantly upwards."