Lahore, September 25, 2023 (PPI-OT): Engro Energy Limited (EEL) along with China Machinery and Engineering Corporation (CMEC) has set up a Thar coal based (2 x 330 MW) power plant (Complex) - Engro PowerGen Thar (Pvt.) Limited (EPTL). Since its COD in July’19, EPTL is running its operations smoothly and sustainably and achieving operational benchmarks. The primary fuel is Thar Coal. A 30-year coal supply agreement is signed with Sindh Engro Coal Mining Company (SECMC), which is operating a coal mine in Thar Block-II. Company's both units were successfully connected to and are providing electricity to the grid. During 1HCY23 the plant generated net electrical output of ~1,464GWh (CY22: ~3,686GWh, CY21: ~4,225GWh) and subsequently recorded revenue of PKR ~48,240mln (CY22: ~74,859mln, CY21: PKR ~76,915mln) against Energy and Capacity invoices. Throughout the period, the plant was able to meet its operational benchmarks of availability and efficiency as agreed in the PPA.
The financial strength and experience in the energy chain of the sponsoring companies - EEL and CMEC - is positive to the ratings. The Government of Pakistan has given payment guarantee against dues from CPPA-G. However, mounting trade receivables of PKR ~52,042 as on June 2023, remains a cause of concern. EPTL is efficiently managing its net cash cycle days by stretching its payables to SECMC which stood at ~PKR 46,081 as on June 2023. To finance its working capital needs, the company has availed short-term borrowing lines of PKR 18,750mln (~96% utilized) as of June 2023. Going forward, the Company plans to manage its operations through adequate cashflow generation and efficient utilization of working capital lines. The Company has successfully repaid approximately 30% of its foreign debt and 21% of its local debt relating to the plant construction cost. As of June 2023, the company has long term debt obligations of PKR 121,686mln along with current maturity of PKR 17,921mln.
The assigned ratings reflect the sponsors strength along with guarantee provided by the power purchaser. Going forward, the Company’s main focus would be to keep the plant operational and meet required benchmarks along with timely repayment of debt obligations.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: [email protected]
Website: www.pacra.com