Nishat Power Limited ("Nishat" or "the Company") operates a 200MW power plant in Jamber Kalan, Kasur, Punjab, on a “Build Own Operate (BOO)” basis. The plant is designed to run on Residual Fuel Oil (RFO). The plant employs a combined cycle reciprocating engine single-fuel RFO red technology. The plant configuration comprises a steam turbine (13.979MW) and eleven (11) Wartsila 18V46 (186.021MW), medium-speed (500rpm), 4-stroke engines, with each having a gross capacity of 16.911MW. While using RFO as the primary fuel, the plant uses light fuel oil (LFO) for start-up. Net rated capacity, after accounting for auxiliary consumption, is 195.305MW. The plant sells electricity to CPPA-G, the power purchaser. The total cost of the project was US$229 mln - comprising 80% debt and 20% equity.

Nishat Power has a generation tariff (levelized tariff for years 1-25) of US ¢15.4127 (PKR 13.16) per kilowatt hour (kWh) approved by NEPRA. However, after the continuous indexation and escalation in fuel prices, for December 2024, the Company was receiving the tariff for the fuel cost component of PKR: 29.4655/KWh, capacity charge of PKR: 2.2034/KWh, and variable O&M charge of PKR: 3.0030/KWh.

Pursuant to the Master Agreement, the Power Purchaser and the Company developed and submitted to NEPRA, a tariff adjustment application to prospectively reduce ROE and ROEDC components, i.e. 17% per annum in PKR on NEPRA-approved equity at the Commercial Operations Date for RoE and RoEDC calculated at USD/PKR exchange rate of PKR 168/USD, with no future USD indexation.

Nishat Power is a subsidiary of Nishat Mills Limited, which holds a 51% stake in the Company. The Company’s ordinary shares are listed on the Pakistan Stock Exchange (PSX). Shareholding is diversified, with around 9% held by banks and financial institutions, 36% by the general public, and the balance by other parties.

Stability for IPPs stems from the long-term agreements signed with the power purchaser. Additionally, the Company benefits from the sponsors’ association with the Nishat Group, which provides further comfort.

Nishat Mills, established in 1951, is the largest textile composite unit in Pakistan and a leading exporter with integrated facilities spanning spinning, weaving, dyeing, printing, finishing, and stitching. Rated “AA” by PACRA, Nishat Mills is the flagship of the Nishat Group, a diversified conglomerate with strong financial strength and interests across textiles, cement, energy, and financial sectors. The Group has extensive experience in the power sector through its ownership and management of other IPPs, including Lalpir Power and Pakgen Power (both rated “AA” by PACRA), along with captive power plants.

Association with the financially strong and diversified Nishat Group provides significant support and comfort to NPL’s financial profile.

The Board of Directors comprises seven members, including the CEO and two independent directors. Five members represent the Nishat Group, while the independent directors enhance governance. The Board is chaired by Mr. Hassan Mansha. Other members include Mr. Ghazanfar Hussain Mirza (CEO), Mr. Humayun Maqbool, Ms. Maleeha Humayun Bangash, Mr. Mahmood Akthar, Mr. Shahzad Ahmad Malik, and Mr. Muhammad Aqib Zulfiqar.

NPL’s Board comprises a qualified and experienced team of professionals from the Nishat Group and independent backgrounds. Collectively, the members bring expertise in finance, energy, corporate management, and business operations, enabling them to provide effective strategic guidance to management. The Board plays a key role in ensuring a strong governance framework and internal controls, thereby supporting the Company’s long-term sustainability.

For effective oversight of the matters, the board has formed two board committees. (i) Audit Committee (ii) HR & Remuneration Committee to ensure smooth and effective monitoring of operations.

Riaz Ahmed & Co. are the external auditors of the Company and they have given an unqualified opinion for the financials for the period ended June 30, 2024.

Nishat Power has a well-defined and lean organizational structure, supported by a professional management team that oversees operations and ensures the implementation of effective control mechanisms. The structure facilitates efficiency, accountability, and smooth coordination across functions.

The Company is led by Mr. Ghazanfar Hussain Mirza, Chief Executive Officer, who also serves on the boards of various Nishat Group companies. He has a Bachelor's degree in Mechanical Engineering from NED University of Engineering & Technology. Mr. Mirza has 40 years of experience in business development and business & corporate management in engineering, technical, and multinational environments. He has served as Managing Director of the Group Companies of Wartsila Corporation (Finland) in Pakistan and Saudi Arabia. He is supported by a team of qualified professionals across key functions. The technical team reports to the General Manager (Power), who monitors and reviews operations and maintenance performance on a daily basis and reports directly to the CEO, ensuring effective oversight and operational efficiency.

Nishat Power has enhanced its functions by introducing a Strategic Planning Division; the division will give the strategic insight to the Company, and also at the group level to have a competitive edge.

Various MIS reports are prepared for the management to keep track of all operating activities and operational efficiencies. Apart from daily reporting, a more detailed MIS on a monthly basis is also generated.

Nishat Power’s revenues are derived from the sale of electricity to the power purchaser, NTDC/CPPA-G, under a long-term Power Purchase Agreement (PPA). In line with the agreement, the Company remains entitled to capacity payments as long as it maintains the required benchmark availability and remains ready to deliver electricity, irrespective of actual dispatch.

Nishat Power Limited is managing O&M activities in-house through its own experienced staff. While this approach is expected to generate cost savings, any deviation from operational benchmarks will be borne by the Company.

Nishat Power has various fuel supply arrangements, mainly from PARCO, Attock Petroleum. While Shell and Chevron Pakistan are the suppliers of additives and lubricants.

Nishat Power maintains adequate insurance coverage, aligned with industry practice and project requirements, providing comfort on operational risk mitigation.

As of June 30, 2024, the installed capacity within the CPPAG system stood at 42,362 MW, distributed among various sources, including thermal (49.01%), hydroelectric (29%), renewable energy (4.75%), and nuclear (16.88%). Within the total thermal generation, coal accounts for 30.5%, contributing 20,542 GWh. The total coal capacity is 7,260 MW out of which 2,640 MW is local coal and 4,620 MW is imported coal. The total electricity generated in the country during FY24 amounted to 138,028.86 GWh (FY23: 154,056.18 GWh). The decline in consumption is attributed to reduced economic activity, a slowdown in industrial and commercial operations, and the high cost of electricity, which has negatively impacted household consumption patterns.

In 3QFY25, Nishat Power generated only 51 GWh of electricity, a sharp decline of ~85% from 342 GWh in the same period of FY24. The prime reason for this decline is the revision of tariff to a hybrid structure under negotiations with the Task Force for Power Sector Reforms, which significantly reduced the Company’s invoicing levels. In addition, lower generation volumes compounded the impact, as the power purchaser increasingly relied on captive power plants and cheaper sources of electricity, such as Hydro, Solar, and Wind, in line with the broader shift towards a cost-efficient energy mix.

During the period, the plant operated at an average capacity factor of only 4.00% (March 2024; 25.57%). The decrease in capacity factor is attributed to the lower generation due to the revision of tariff to a hybrid structure and the increasing reliance of the Power Purchaser on captive power plants and cheaper sources of electricity.

Nishat Power’s project was financed through a capital mix of 20% equity (USD 46m) and 80% debt (USD 183m). The project-related debt of PKR 14,164m was fully repaid in June 2020, leaving the Company debt-free on a long-term basis.

As of Mar’25, NPL’s trade receivables declined significantly to PKR 671m from PKR 13,941m in Mar’24 (FY24: PKR 14,426m), mainly due to receipt of PKR 9.6bn from CPPA-G. These receivables remain secured under the Government of Pakistan guarantee. With this settlement, short-term borrowings were fully retired, cash and bank balances stand at PKR 8.5bn, strengthening liquidity and easing finance cost pressures.

NPL previously met its working capital needs through internal cash generation and short-term borrowings. However, short-term borrowings were fully retired in Mar’25, compared to PKR 2,565m in Mar’24 and PKR 2,960m in Jun’24, reflecting improved internal cash generation following receivable settlements.

The net cash cycle stretched to 640 days by Dec’24 (vs. 244 days at FY24-end) but improved to 451 days in Mar’25 following the major receivable settlement. Coverage ratios declined to 56.2% by Mar’25, mainly due to elevated finance costs earlier in the year compared to Jun’24. Going forward, with receivables cleared, borrowings retired, and cash balances strengthened, the cash cycle and coverage metrics are expected to normalize, providing greater comfort to the company’s liquidity profile.

Following the settlement of project debt, NPL’s only remaining obligations were short-term borrowings, which were fully retired in 3QFY25 (vs. PKR 1,650m in Dec’24 and PKR 2,960m in Jun’24). Consequently, the Company’s leverage ratio declined to 0% at Mar’25, compared to 5.7% in 1HFY24 and 8.3% in FY24, reflecting a debt-free capital structure.