Engro PowerGen Thar (Pvt.) Limited (EPTL or the Company) was formed in 2014, with the aim to set up a 2x330MW power project in Thar Block II, Sindh, Pakistan. The company is a joint venture between Engro Powergen Ltd (EPL), China Machinery Engineering Corporation (CMEC), Habib Bank Ltd (HBL), and Liberty Mills Limited. This project utilizes indigenous lignite coal from the Tharparkar district to generate electricity. The project successfully achieved commercial operations on July 10, 2019, project is part of the China-Pakistan Economic Corridor (CPEC) energy project, a significant initiative for energy cooperation between China and Pakistan.

EPTL’s current tariff for July–September 2025 is 12.8626 US¢/kWh. The tariff is indexed to the Pakistan Rupee–US Dollar exchange rate, US CPI, N-CPI, KIBOR, SOFR, exchange rate movements, coal prices, and coal calorific values. Principal and interest repayments, return on equity (ROE), insurance, and fixed and variable O&M costs form part of the scalable (adjustable) component, while 4.6798 US¢/kWh represents the reference tariff, and 8.5015 US¢/kWh and 8.2550 Rs./kWh is the levelized tariff for Engro PowerGen Thar (Pvt.) Limited.

EPTL's key source of earning is the revenue generated against Energy and Capacity invoices to the Power Purchaser, CPPA-G. The IRR of the project, as agreed with NEPRA, is 20%. The ROE of the project is at 30.65%.

EPTL’s shareholding structure comprises Engro Energy Limited (EEL) as the majority shareholder with 50.1%, followed by China Machinery Engineering Corporation (CMEC) holding 35%, Habib Bank Limited (HBL) with 9.5%, and Liberty Mills Limited (LML) with 5.4%. In addition, CMEC has subscribed to preference shares amounting to USD 85 million.

The stability of EPTL is underpinned by its long-term Power Purchase Agreement (PPA) with CPPA-G, backed by sovereign guarantees from the Government of Pakistan, ensuring a predictable revenue stream. Further comfort is derived from the strong sponsorship of Engro Energy Limited, China Machinery Engineering Corporation (CMEC), Habib Bank Limited (HBL), and Liberty Mills Limited, all of whom bring extensive financial strength and sectoral expertise. The Company’s diversified and reputable sponsors provide assurance of continued support in both normal operations and times of stress, thereby reinforcing the overall financial and operational stability of EPTL.

The sponsor groups bring deep expertise across multiple sectors, including power, coal mining, textiles, banking, and engineering contracting. Engro Energy Limited contributes extensive experience through its successful track record in developing and operating power projects in Pakistan. China Machinery Engineering Corporation (CMEC), with a strong international presence, specializes in the construction of power projects spanning generation, transmission, and distribution, and has delivered numerous large-scale projects worldwide. Together, the sponsors’ diverse capabilities and proven execution strength enhance EPTL’s operational efficiency and long-term sustainability.

EPTL’s sponsors demonstrate substantial financial solidity and capacity to support the company in both routine operations and under stressed conditions. Engro Group provides robust backing through a diversified and highly profitable energy portfolio. CMEC brings strong institutional stability and global exposure, reflecting deep financial resilience. Habib Bank Limited (HBL), Pakistan’s largest private-sector bank with a well-capitalized balance sheet, and strong capital adequacy metrics, enables reliable access to liquidity and financial markets. Liberty Mills Limited (LML), a flagship textile and energy group rated, sustains steady cash flows, and a footprint in power and renewable energy investments. The sponsors’ combined financial resilience underpins EPTL’s creditworthiness and long-term operating sustainability, reassuring stakeholders of the company’s ability to meet obligations in all scenarios.

The Board of Directors of Engro Powergen Thar Limited (EPTL) is composed of nine members, with representation reflecting the shareholding pattern of the company. Engro Energy Limited (EEL) nominates five directors, China Machinery Engineering Corporation (CMEC) nominates three, while Habib Bank Limited (HBL) nominates one.

The Board comprises experienced professionals with strong backgrounds in energy, finance, and international project development. Mr. Farooq Barkat Ali, Chairman of the Board and CFO of Engro Corporation Limited, brings nearly two decades of financial and strategic expertise. Mr. Athar Abrar Khwaja, CEO of EPTL, leads the company’s management and operations with over a decade of experience within the Engro Group. Other members, including Mr. Khaqan S. Khan, Mr. Sami Aziz, Mr. Zhao Wenke, Ms. Shi Baojun, Mr. Wang Pu, Abdul Qayoom, and Fahad Dar, provide expertise across engineering, project finance, technical operations, and stakeholder engagement. Collectively, the Board’s diverse skillset enhances EPTL’s ability to manage complex projects, mitigate risks, and ensure long-term sustainable operations.

The Board is supported by key governance sub-committees, including the Audit Committee and the Board Compensation Committee, which ensure sound financial oversight, compliance, and executive accountability.

For the External audit services the Board has appointed A.F. Ferguson & Co., reinforcing transparency and good governance practices, along with this the board also ensures timely preperation of financial statements.

IPPs are generally featured by a flat organizational structure, mainly comprising finance and technical staff, while the engineering, construction and operations of the plant are outsourced.

The management of Engro Powergen Thar Limited (EPTL) is spearheaded by seasoned professionals with extensive industry expertise. Mr. Athar A. Khwaja, Chief Executive Officer of both Engro Energy Limited (EEL) and EPTL, brings nearly 20 years of experience across process engineering, project execution, marketing, strategic sourcing, and business development. Having begun his career with Engro Polymer & Chemicals Limited in 2004, he has since led several milestone projects, including the relocation and commissioning of a VCM plant from the United States and major PVC and VCM expansions. His leadership spans senior roles at ICI Pakistan and Engro Group, where he has consistently delivered complex projects and long-term growth strategies.

The management of EPTL is mostly engaged in the finance related activities. The company maintains an adequate MIS which helps management to keep track of all operations and liaison with O&M operator.

The control environment at Engro Energy is robust, with strong leadership, clear procedures, and proactive risk management contributing to effective financial governance and operational efficiency.

The electricity generated will be sold to Central Power Purchasing Agency - (CPPA-G) under a 30-year Power Purchase Agreement (PPA). Further, the obligations of the power purchaser are guaranteed by the Government of Pakistan. Moreover, a stable revenue stream is also ensured through the guaranteed capacity charge (the component of the tariff received irrespective of electricity production).

The Company has now selected Harbin Electric International Company Limited as its O&M partner. This contract is for a duration of four years and includes a provision for rollover, allowing for potential extensions beyond the initial term.

The Coal Supply Agreement of EPTL is with Sindh Engro Coal Mining Company for 30 years where SECMC will provide 320,000 tons coal per month. The Agreement is an exclusive contract by which EPTL will be allowed to use the substitute coal (Imported coal) only in case of non-availability of coal by the Supplier.

Insurance is attained for material damage, third party liability, and delay in startup affecting the profits. Additionally, Marine, Terrorism, and Excess Third Party Liability Insurances are also held.

As of March 2025, Pakistan’s total installed electricity generation capacity reached 46,605 MW, marking a 1.6% increase from the previous year, driven largely by the addition of 2,813 MW through net-metered distributed renewable energy systems. During FY 2024–25 (July–March), the country produced 90,145 GWh of electricity, with 46.3% generated from fossil fuels (coal, RLNG, oil), 30.4% from hydropower, 19.1% from nuclear, and 4.2% from renewable sources including wind, solar, and bagasse. This reflects a gradual shift toward a cleaner energy mix, particularly with solar and net-metered distributed systems, although their contribution to total generation remains modest. Despite the diverse mix, the sector faces structural challenges such as transmission bottlenecks, underutilization of cost-effective renewable plants, and heavy financial burdens from capacity payments and rising energy purchase costs. Policy measures such as tariff adjustments and renewable incentives have been implemented, but further reforms, investment in grid infrastructure, and expansion of renewable generation are essential to ensure a reliable, sustainable, and affordable energy supply for Pakistan’s growing demand.

The plant generated net electrical output of ~1867.015GWh during 1HCY25. The delivered energy depends on the electricity demand from the power purchaser and the plants availability.

The required availability for EPTL under the PPA is 82.5% during first five years and 85.5% for next 25 years. Meanwhile, the required efficiency of the plant is 37%. On average the plant maintained its required benchmarks throughout the period.

EPTL’s project is financed 75% through debt (USD 831 million), split 75:25 between foreign and local borrowings, reflecting reliance on international funding. The foreign debt of USD 621 million, provided by a consortium of Chinese banks, has a 14-year tenure with 20 semiannual installments at 6-month LIBOR plus 4.2%, transitioning to SOFR in 2025. It is secured via first-ranking hypothecation over project assets, with shareholders providing 10% cost overrun support. The local debt of USD 210 million (Rs. 24,150 million) includes facilities led by HBL, National Bank of Pakistan, and Islamic banks, also with 14-year tenures and semiannual repayments at 3-month KIBOR plus 3.5%, similarly secured and supported by shareholders. As of June 30, 2025, outstanding foreign debt was USD 317.579 million, and local debt approximately Rs. 15,039.025 million. Overall, the structure combines long-term secured financing with shareholder support, balancing leverage and risk while accommodating interest rate transitions and currency exposures.

As of June 30, 2025, the Company holds significant trade and other receivables, reflecting delays in payments primarily due to circular debt issues in the power sector. Total trade debts amount to PKR 28,500 million, with the majority with all in 0–90 days. Overdue balances from CPPA and SECMC, latest as of June 30, 2025, are PKR 17,105 million and PKR 9,378 million, respectively. These receivables are secured under the Implementation Agreement and are not considered impaired. To manage working capital and liquidity risks, the Company has utilized short-term borrowing limits while continuously monitoring secured and collectible receivables.

As of 1HCY25, Engro Powergen Thar Limited’s gross working capital days stood at 149, down from 167 days in Dec-24, although reduced they are driven by delays in payments from CPPA-G and pending receivables against energy and capacity invoices. Trade receivables averaged 146 days, while the company managed payables with SECMC to maintain net working capital days of 6, which showed and improvement. To bridge the gap and fund working capital requirements, the company continued to utilize short-term borrowings.

In 1HCY25, the company’s free cash flow from operations (FCFO) stood at PKR 24,841 million, compared to PKR 46,372 million for CY24. Despite this, coverage ratios (EBITDA/Finance Cost) improved significantly to 3.8x from 2.6x in CY24, driven by a substantial reduction in finance costs, which amounted to PKR 6,678 million for the quarter, compared to PKR 28,475 million for the full year CY24.

As of June 30, 2025, Engro Powergen Thar Limited continues to be structured on a 75:25 debt-to-equity ratio. Shareholders’ equity stood at PKR 89,436 million, reflecting a modest increase from PKR 85,495 million in December 2024. Total assets declined to PKR 283,137 million from PKR 293,979 million, largely due to a reduction in trade receivables to PKR 38,354 million. Current liabilities were recorded at PKR 65,677 million, down from PKR 70,130 million in December 2024, while borrowings stood at PKR 128,024 million, showing a slight reduction as the company continues its debt repayment cycle. Overall, the capital structure reflects high leverage, with a net asset base of PKR 89,436 million supporting equity stability amid ongoing deleveraging efforts.