Liberty Power Tech Limited ('Liberty Power' or the 'Company') operates a 200MW power plant based on Residual Fuel Oil (RFO) near Faisalabad. The plant configuration comprises eleven Residual Fuel oil-fired diesel generators having a capacity of 16.5MW each, along with a steam turbine. Net rated capacity, after accounting for auxiliary consumption, is ~196MW. The plant sells electricity to CPPA-G, the power purchaser.

The Company now operates under a “Hybrid Take-and-Pay” tariff structure, following the revision from the previous “Take-or-Pay” arrangement. The reference generation tariff includes a capacity charge component and a dispatch-based energy charge component. The levelized tariff over a 25-year period is PKR 7.87/kWh. For the July-September period, the capacity charge stood at PKR 1.9778/kWh, while the energy charge was PKR 43.1515/kWh.

Pursuant to the Master Agreement signed on February 11, 2021, the Company agreed to discounts in tariff components, specifically in the Return on Equity (ROE) and Return on Equity During Construction (ROEDC). This results in a return of 17% per annum in PKR, calculated at an exchange rate of PKR 148/USD, with no future USD indexation, instead of the previous USD-indexed return of 15%

Liberty Power Tech Limited is primarily owned by the Liberty Group, with Mukaty Family holding 61% and Liberty Mills Limited holding 29% shareholding, while the remaining 10% stake is held by Soorty Enterprises.

The ownership structure of the Company has remained stable over the years, with no major changes anticipated in the foreseeable future. The sponsors maintain a strong presence in the energy sector through various ventures, including wind-based renewable power projects, and continue to explore opportunities for portfolio expansion. This sustained commitment reflects the sponsors’ long-term strategic interest in the Company, indicating a low likelihood of any stake dilution going forward.

Liberty Mills Limited incorporated in February 1965, is in the business of manufacturing and processing all kinds of textile fabrics and made-ups. Liberty Group has gradually diversified within the power sector. The sponsors possess relevant experience and have a proven track record of successfully delivering projects from initial concept to operational success.

The sponsors possess strong financial strength, backed by a well-diversified and profitable business portfolio across multiple sectors. Their robust financial standing enhances the Company’s credit profile, as they have demonstrated the capacity and willingness to provide support both during normal operations and in periods of financial stress.

The Company’s Board of Directors (BoD) comprises eight members, including the Chief Executive Officer. All board members represent the Liberty Group, ensuring strategic alignment and effective oversight consistent with the Group’s long-term vision.

Mr. Ashraf Saleem Mukaty serves as the Acting Chairman of the Board and has held multiple leadership roles within the Liberty Group. He also serves as the Chief Executive Officer of Liberty Mills Limited. The remaining board members are seasoned professionals with extensive experience and a longstanding association with the Company, contributing to effective governance and strategic direction.

The Board has constituted an Audit Committee comprising three members responsible for overseeing the Company’s financial reporting, internal controls, and operational performance. Regular board meetings are held to deliberate on key matters, including plant efficiency, financial performance, and budgetary reviews. The Board remains actively engaged in providing strategic oversight and guidance, ensuring sound governance and effective decision-making within the Company.

Yousaf Adil Chartered Accountants (SBP category 'A') is the external auditor of the Company. They have expressed an unqualified opinion on the Company’s financial statements for the year ending June 2025.

The Company maintains a well-defined organizational structure, ensuring clear lines of authority and accountability. The Chief Financial Officer (CFO) and the Resident Director of the plant report directly to the Chief Executive Officer (CEO), who in turn reports to the Board of Directors. The core management team comprises seven qualified professionals with extensive experience in the energy sector, enabling efficient decision-making and smooth operational management.

Mr. Azam Sakrani serves as the CEO and brings over two decades of diversified experience in banking, finance, and industrial operations. Mr. Kashif Hanif, a fellow member of the Institute of Cost and Management Accountants of Pakistan (ICMAP), has been serving as the CFO since September 2019. The management team consists of qualified and experienced professionals with expertise across finance, operations, and technical domains, ensuring effective management and operational efficiency within the Company.

The management operates under the close supervision of the Board, which actively monitors the plant’s overall performance and ensures operational effectiveness through periodic evaluations. The Board provides strategic guidance and support in key decision-making areas, facilitating smooth operations and the achievement of organizational objectives.

Liberty Power maintains a well-established control environment, supported by a robust IT infrastructure. The quality, breadth, and depth of its systems and processes remain satisfactory, ensuring effective internal controls, reliable reporting, and operational efficiency.

Liberty Power’s revenues are derived from the sale of electricity to CPPA-G under a long-term Power Purchase Agreement (PPA), valid until March 2036. Following recent amendments, the Company now operates under a Hybrid Take-and-Pay model. The arrangement continues to ensure capacity payments subject to required plant availability, providing stability to the revenue stream.

Operations and Maintenance (O&M) activities are outsourced to Wärtsilä Pakistan under a long-term agreement. The contract was renewed for a third term in July 2021 for a period of six years, expiring in 2027. Wärtsilä, being a highly experienced O&M operator, ensures the plant’s efficient performance, reliability, and adherence to technical and safety standards.

The Company procures Residual Fuel Oil (RFO) from multiple local Oil Marketing Companies (OMCs), including Attock Petroleum, Byco Petroleum, and Pakistan State Oil. While the fuel supply risk remains with the Company, it is effectively mitigated through diversification of suppliers and prudent inventory management practices, ensuring operational continuity.

The Company has adequate insurance coverage for property damage and business interruption.

In FY25, Pakistan’s power sector generated approximately 127,160 GWh against an installed capacity of 45,888 MW, remaining broadly unchanged from the previous year and 6% below the reference target. Hydropower dominated the energy mix with about 31%, followed by nuclear at 18%, RLNG at 17%, local coal at 12%, imported coal at 7%, gas at 9%, and solar at 1% (rising to 5% when net-metered capacity is included). Local coal-based generation was recorded at nearly 15,547 GWh, while imported coal surged to 9,066 GWh, an 80% year-on-year increase, driven by more competitive dispatch. Net-metered solar capacity grew sharply to around 2,800 MW, reflecting a shift toward self-generation, while wind maintained a modest 3% share, constrained by curtailments and grid limitations. Demand projections for FY26, under both normal and high scenarios, indicate growth of 2.8% to 5%.

In FY25, the Government of Pakistan (GoP) continued its focus on tariff rationalization and structural reforms in the power sector. A Task Force was established to implement these changes, including the adoption of “Hybrid Take-and-Pay” tariff structures. Under this initiative, IPPs operating under the 2002 policy agreed to reduce tariffs in line with the Task Force’s terms. The government is now focusing on developing an energy market and is drafting a framework to implement the Competitive Capacity-Based Tariff Mechanism (CCBTM), aimed at improving efficiency and competitiveness in the power sector.

During FY25, Liberty Power generated 77 GWh of electricity (FY24: 239 GWh), reflecting a significant decline in generation. The reduction primarily stemmed from a shift in electricity demand toward more cost-effective energy sources such as hydro, solar, wind, and biogas, which have gained preference in the national energy mix.

The Company’s topline declined to PKR 6,935 million in FY25 (FY24: PKR 16,010 million), primarily due to the revision in tariff terms. During the year, a Task Force constituted by the Prime Minister of Pakistan initiated amendments to the Power Purchase Agreement (PPA) and Implementation Agreement (IA), leading the Company to adopt a “Hybrid Take-and-Pay” tariff model. Consequently, Liberty Power reported a loss of PKR 652 million in FY25, compared to a profit of PKR 7,586 million in FY24, mainly due to a one-time adjustment of late payment surcharge receivables written off under the revised agreement—pertaining to prior periods. Despite the tariff revision, the Company continues to maintain a sizeable short-term investment portfolio, the returns from which are expected to provide steady support to profitability going forward.

During the period, the plant operated at an average load factor of only 4.5% (June 2024; 14%). The decrease in load 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. 

The project was initially financed through a capital structure comprising 75% debt (approximately USD 180 million) and 25% equity (approximately USD 60 million). The project-related debt, amounting to PKR 15,137 million — including a senior Islamic facility of PKR 13,488 million and a long-term finance facility of PKR 1,649 million — was fully repaid by December 2020, rendering the Company debt-free.

As of June 2025, Liberty Power’s liquidity position strengthened following the receipt of long-outstanding payments from CPPA-G. Trade receivables declined sharply to around PKR 2,362 million (Jun-24: PKR 12,247 million), easing pressure on working capital. The Company maintained a strong liquidity buffer, with short-term investments increasing substantially to PKR 25,095 million in FY25 (FY24: PKR 10,767 million), reflecting effective cash flow management and a conservative investment approach. Additionally, sponsor support in the form of a PKR 6 billion loan further reinforced the liquidity profile. Despite sector-wide liquidity challenges, Liberty Power’s financial flexibility remains adequate, backed by a solid investment base and timely sponsor support.

As of June 2025, the Company’s net cash cycle extended to 403 days (Jun-24: 346 days), primarily due to higher inventory and receivable days, reflecting delayed payments from the power purchaser. Average receivable days stood at 384 (Jun-24: 327), while payable days increased slightly to 16 (Jun-24: 4). To support its working capital requirements, the Company availed short-term borrowings of PKR 5,887 million (Jun-24: PKR 97 million), with additional unutilized limits of PKR 5.4 billion available. The increase in short-term debt reflects the need to bridge temporary liquidity gaps arising from delayed receipts and lower generation levels during the year.

During FY25, Liberty Power’s cash flow generation weakened compared to the previous year due to lower dispatch levels and reduced profitability. Free cash flows from operations (FCFO) declined to PKR 1,494 million (FY24: PKR 4,978 million), primarily reflecting lower generation and a one-time adjustment with CPPA-G. Consequently, coverage ratios also deteriorated, with interest coverage reducing to 3.3x (FY24: 9.3x) and debt coverage (FCFO / Finance Cost + CMLTB) declining to 1.8x (FY24: 7.8x). Despite these pressures, liquidity support from sponsors and substantial investment holdings provided a cushion to the Company’s overall cash flow position.

Following the full repayment of long-term project debt, Liberty Power’s capital structure remains sound; however, leveraging increased to 31.7% in FY25 (Jun-24: 0.3%) due to the utilization of additional short-term borrowings to support liquidity and operational needs. Despite this rise, the Company maintains a strong equity base and adequate financial flexibility, reinforced by sizable short-term investments and continued sponsor support, which collectively sustain a healthy capitalization profile.