Lucky Electric Power Company Limited Sets Benchmark with Coal-Fired Plant and New Financial Instrument

Karachi, Lucky Electric Power Company Limited (LEPCL) has established a new paradigm in Pakistan’s energy sector with the successful commissioning of a 1x660MW coal-fired power plant and the launch of a novel financial instrument.

According to Pakistan Credit Rating Agency Limited, LEPCL’s power plant, which achieved commercial operation date (COD) in March 2022, is now actively supplying electricity to the national grid. The plant primarily operates on coal sourced from a supply agreement with Sindh Engro Coal Mining Company (SECMC). Notably, SECMC is expected to start providing coal from its developing Block-II (Phase III) in May 2024, a delay from the initially planned May 2023. Meanwhile, LEPCL has also secured imported coal through agreements with reputable suppliers and is currently using this for electricity generation.

The Company reported a significant topline of approximately PKR 28.6 billion in the first quarter of FY24, alongside a bottom line of around PKR 4.2 billion. Operational management of the plant has recently been taken over by M/s Harbin Electric International Co., Ltd. -P.R. China (HEI) from March 2023, bringing in their extensive experience and expertise.

In terms of financial maneuvers, LEPCL is actively managing its capital requirements. The Company has utilized about 80% of its short-term financing facilities, amounting to approximately PKR 18,249 million as of September 2023. Its cumulative short-term borrowings stand at around PKR 43,648 million. Additionally, as of December 2023, LEPCL has outstanding debt instruments totaling PKR 19 billion.

The Company is set to issue a new financial instrument, PPSTS-15, a short-term sukuk worth PKR 6 billion, to meet its working capital needs. This unsecured, unlisted, and privately placed sukuk will have a tenure of six months and includes a green option of PKR 2,000 million. The sukuk will carry a profit rate of 6MK+30bps, with profit and principal due at maturity.

LEPCL’s financial strength is bolstered by its parent company, Lucky Cement Limited, part of the Yunus Brothers Group. Lucky Cement owns 100% of LEPCL’s shareholding. The Company’s board, led by Chairman Mr. Muhammad Ali Tabba, who has been with the Group for nearly three decades, plays a pivotal role in guiding LEPCL’s strategic direction.

The success of LEPCL’s coal-fired power plant and the introduction of PPSTS-15 mark significant strides in Pakistan’s energy and financial sectors, reflecting the Company’s commitment to sustainable growth and innovation.

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