Karachi: Lucky Electric Power Company Limited (LEPCL) has received a preliminary rating from the Pakistan Credit Rating Agency Limited (PACRA) for its newly issued debt instrument, PPSTS-20, valued at PKR 7 billion, as part of its financial strategy to support ongoing and future operational needs. This comes as the company continues to manage a significant power plant and navigates through supply and financial challenges.
According to The Pakistan Credit Rating Agency Limited announcement issued on 06 Aug 2024, which operates a 1x660MW coal-fired power plant that reached commercial operation in March 2022, has been successfully contributing to the national grid. The plant, primarily fueled by coal sourced under an agreement with Sindh Engro Coal Mining Company (SECMC), is set to receive an increased coal supply by December 2024, a shift from the previously planned May. Meanwhile, LEPCL is also relying on imported coal to maintain its electricity generation, with a revenue of approximately PKR 71 billion recorded in the first nine months of fiscal year 2024.
The plant’s operations have been enhanced under the management of Harbin Electric International Co., Ltd. from China, which took over in March 2023. As LEPCL focuses on maintaining high operational standards, it has utilized about 80% of its short-term financing facilities, totaling around PKR 18.249 billion, with overall short-term borrowings reaching approximately PKR 39.618 billion by March 2024.
LEPCL is also preparing to replace its maturing debt instrument, PPSTS-16, with the issuance of PPSTS-20, set to mature on August 15, 2024. This strategic financial maneuvering is backed by the company’s strong ties with Lucky Cement, which PACRA notes adds to the firm's financial strength and stability in the energy sector.
Despite these strengths, LEPCL faces challenges such as the significant devaluation of the Pakistani Rupee, supply chain disruptions, and the need for tariff adjustments. However, the company benefits from a stable offtake agreement with the Central Power Purchasing Agency (CPPA-G), ensuring capacity payments even without active purchase orders, supported by a government payment guarantee.