Title: Pakistan's persistent energy crisis and performance of private power producers

Authors: Amir Ikram; Qin Su; Muhammad Fiaz

Addresses: State Key Laboratory for Manufacturing Systems Engineering, School of Management, Xi'an Jiaotong University, No. 28, Xianning West Road, 710049 Xi'an, China ' State Key Laboratory for Manufacturing Systems Engineering, School of Management, Xi'an Jiaotong University, No. 28, Xianning West Road, 710049 Xi'an, China ' State Key Laboratory for Manufacturing Systems Engineering, School of Management, Xi'an Jiaotong University, No. 28, Xianning West Road, 710049 Xi'an, China; Institute of Business and Management, University of Engineering and Technology, GT Road, Lahore, Pakistan

Abstract: The study examines the linkage between profitability and working capital management of private sector power producers of Pakistan. The energy crisis resulted in increased reliance on independent power producers (IPPs), which lead to various financial irregularities. Data for a period of seven years (2008-2014) was collected from 11 IPPs listed on the Karachi Stock Exchange descriptive analysis, ANOVA, and regression analysis, along with trend analysis and other diagnostic tests, were deployed to examine the association between five working capital ratios and net operating profit. Net trading cycle, current assets and current liabilities were found to exhibit significant relationship with profitability of IPPs. The findings suggest that the persistent problem of circular debt can be minimised through supply chain excellence, which can be realised through vigilant selection of suppliers and vendors on the part of private power producers. Since working capital management significantly influences the performance of IPPs, the study persuades undertaking of taking corrective measures before pursing long-term goals of installing new units. Dynamic business model is recommended that enhances collaboration and brings financial viability to the power sector.

Keywords: energy crisis; independent power producers; IPPs; working capital management; net operating profit; analysis of variance; Pakistan.

DOI: 10.1504/IJBPM.2018.090702

International Journal of Business Performance Management, 2018 Vol.19 No.2, pp.237 - 252

Available online: 11 Jan 2018 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article