ANNUAL REPORT 2017 STATE ELECTRIC COMPANY LIMITED TABLE OF CONTENTS Executive Summary About us 1 Chairman’s Message 3 CEO’s Message 4 Board of Directors 5 Executive Management 7 How we grew 14 Who we serve 15 Statistical Highlights 16 Financial Highlights 17 Our Footprint 18 Market Review 19 Strategic Review 20 - Power Generation 20 - Distribution System 24 - Human Resources 25 - Corporate Social Responsibility 29 - Customer Services 30 - Financial Overview 32 - Creating efficiency and reducing cost 40 - Business Diversification 41 - Renewable Energy 44 Moving Forward 45 - Grid of the Future 46 - An Efficient Future 47 - Investing for the Future 47 Audited Financial Statements 2017 48 Company Contacts EXECUTIVE SUMMARY The year 2017 is marked as a challenging yet Business was diversified into new areas such successful year in the recent history of State as water bottling and supply. Further STELCO Electric Company Limited (STELCO). The main showroom services were expanded to provide highlight of the year is that STELCO has more varieties of products. observed a net positive growth, after a few consecutive loss making years. Though STELCO has posted a positive growth, the increasing gearing ratio is an area of Some of the success stories in 2017 include the concern which needs to be addressed at the commencement of STELCO Fifth Power policy level with government authorities. Development Project as well as addition of generation capacity to the STELCO network. Based on current forecasts, the electricity Further upgrades on distribution network as demand doubles every five to ten years, hence well as adoption of new technologies to STELCO needs to generate a profit of over MVR improve service quality were implemented. 350million per year to maintain a healthy balance sheet. Significant measures have been Under the leadership of CEO Ahmed Zuhoor, taken to improve our income via efficiency drastic changes were brought to the functions initiatives, more effective billing and spending and operation of the management with policies. Despite this good trajectory, the high emphasis on efficiency and reliability of the gearing ratio of the company is an area of service to achieve the government’s pledge of concern. Due to our mandate, we are still taking 24/7 electricity. on more debt to expand our capacity. Hence regulatory help in terms of converting current Focus was given to improving human liabilities to share capital, a cost-reflective tariff, resources with greater emphasis on youth fuel sourcing flexibility as well as duty development. One of the key highlights was the exemption on fuel and lubricants are measures ongoing STELCO Hiyaa Project, which aims to that can be taken to make us achieve our target provide affordable housing for STELCO staff to become sustainable and independent. under the Governments Hiyaa Project. ABOUT US Who we are Our History We are responsible for electricity generation, Our beginnings date back to 1949 when 14kW transmission & distribution and retailing of generator set was installed in Male’ to give electricity in Malé and in the islands we serve. electricity to some government institutions and public buildings. Our objectives are anchored on the expectations expressed in the national energy Though the service was provided under policy; the provision of reliable and sustainable different names through government entities, energy services for social and economic modern day STELCO was incorporated in 1997 development for all our customers. as State Electric Company Limited. His Strengthening power security and reliability, the Excellency Abdulla Yameen Abdul Gayoom provision of round the clock electricity to all, and was appointed as the Chairman of the the use of modern technology that is Company and was instrumental in laying the economically feasible and commercially viable foundations which led to the modernization and are embedded in our mission. growth that STELCO has achieved today. STELCO’s First Anniversary 1998 Page 1 OUR MISSION OUR VISION To provide electricity to enrich the To a c h i e v e t o t a l c u s t o m e r lives of the public every day in every satisfaction through management way and everywhere in a reliable, fast excellence and staff satisfaction. and honest manner. Core Values • Making it as easy as possible to contact our • Continuously enhancing and improving the technical support team 24 hours a day, 7 days a network to ensure that the service we provide week. continues to meet and exceed the expectation of our customers. • Providing clear, complete and accurate information on our products, services and • At all times striving to be honest, friendly and pricing. courteous, treating all customers as valued customers. • Ensuring that in every aspect of our work, each individual is responsible and accountable • Making certain that the level of service we for the quality of their work. provide meet your reasonable expectations. • Treat personal information in the strictest confidence. Page 2 CHAIRMAN’S MESSAGE It gives me great pleasure to present the annual As a corporate citizen, we take our corporate social report for 2017. As always, we stayed true to our responsibility seriously and we consider the impact mission of providing electricity to enrich the lives of on the community in our decision-making process. the public every day in every way and everywhere in We have been involved in multiple education a reliable, fast and honest manner. outreach and apprentice programs, fulfilling our commitment to help young people develop their The year has been an important year for the aspirations. We recognize there is more to do, and company. While several projects for expansion of we are determined to excel in the year ahead. STELCO’s generating capacity was going on, important changes were brought to the Company’s On behalf of the Board of Directors, management management and operations. I am happy to and staff of STELCO, I convey our sincere gratitude announce that the steps taken by the management to His Excellency President Abdulla Yameen Abdul were successful in making STELCO a more Gayoom, for the trust he has placed in STELCO and sustainable company. the continued support and guidance we have received throughout this period. I would also like to Our efforts are geared towards fulfilling the express my appreciation to the Board of Directors of demands of our customers. At the same time the STELCO for their advice, and counsel in formulating Company has to ensure that our services are at par the Company’s strategies and policies. Moreover, with the rapid development and expansion that the we would not have achieved our successes without country is undergoing under the leadership of His the blessing of Almighty Allah, from whom we seek Excellency President Abdulla Yameen Abdul guidance. Gayoom. We recognize that we serve a vital role in the The Board of Directors are committed to continue development of the nation, and we will continue to the work on refining the corporate governance meet customer demand and seek customer structure and practices to reflect the best interests of satisfaction through management excellence and the Company. We believe that transparency, staff satisfaction, as we serve our customers each accountability and responsibility should run day. I am proud of the progress we made in throughout the Company. The Board takes matters advancing our goals in the year 2017 and I am of ethics and compliance very seriously and aims to energized about future prospects as we enter fiscal set a tone at the top which pervades throughout the year 2018 with a healthier financial position, well organization. positioned and better equipped to take on the challenges of the future. While we expand our generating capacity and distribution infrastructure, investing for the development of the Company’s human capital remains a top priority. During the year we have made good progress in our commitments to make the Company a great place to work, not least with our Ahmed Aiman, short and long-term training programs. Chairman Page 3 CEO’S MESSAGE 2017 has been a concrete year of progress for continuous efforts to fulfill our mission of providing STELCO. When I started my tenure at STELCO on electricity to enrich the lives of the public every day in 4th June 2017, the Company was operating at a every way and everywhere in a reliable, fast and deficit and so, my main target for STELCO in 2017 honest manner. Our achievements of this past year was to lay the foundation to make it a cost-effective are the result of the dedication, talent and hard work company. In order to achieve this, we focused on of our staff. For this, I would like to extend my thanks restructuring the Company, regulating the cash and gratitude to the entire staff of STELCO as their outflows, taking strategic measures to bring gearing hard work has paved the way for the Company to to a healthy level, identifying foreseeable technical make successive strides towards achieving our obstacles, introducing innovative financial strategic goals. I believe STELCO’s future depends mechanisms, addressing staff welfare issues and on efficiency and reliability with a professional and taking proactive measures. These measures proved productive workforce and by focusing on staff to be effective, as within 6 months, STELCO posted welfare. As such, we have managed to establish a a record turnover. Our staff and management are welfare board as well as begun the construction of a committed to ensuring that our Company continues staff housing project. with positive outcome leaving the negative cash flow behind by bringing efficiency and productivity. I am grateful to the Board of Directors for their direction, guidance and support to create strategic I am content with the progress we made in 2017. We goals, and their assistance to the management in have a vibrant, highly dedicated workforce that delivering for the continued success of the continues to impress me with their work ethics.