Profile
Plant
Foundation Power Company Daharki Limited ("Foundation Power" or "the Company"), a public limited company, is
operating a combined cycle power plant on a build-own-operate (BOO) basis with a net initial capacity of 180MW
(7.8MW auxiliary consumption). The plant is situated in Daharki, District Ghotki, Sindh, and it achieved its
Commercial Operations Date (COD) in May 2011.
Tariff
Foundation Power’s key source of earnings is the generation tariff received from the power purchaser, CPPAG. The reference generation tariff comprises two components: the capacity charge and the energy charge, resulting in a levelized tariff of US¢ 6.55/kWh. As per NEPRA’s decision dated May 27, 2025, the structure for payment of ROE and ROEDC components within this tariff has been revised under a Hybrid Take-and-Pay mechanism.
Under this arrangement, the parties have agreed to implement a Hybrid Take-and-Pay model. The Company will be entitled to 35% of the ROE and ROEDC components of the tariff as part of the CPP, calculated in line with existing PPA terms. If the dispatched and delivered Net Electrical Output (NEO) exceeds 35% of the total contract capacity (in kWh terms), the Company will be entitled to receive the ROE and ROEDC components on the actual NEO exceeding this threshold. Additionally, the Q&M indexation mechanism has been modified.
Return on Project
The dollar IRR of Foundation Power, as agreed with NEPRA is 15%.
Ownership
Ownership Structure
Foundation Power is wholly owned by Daharki Power Holdings Limited (DPHL), a company registered in the British
Virgin Islands. Fauji Foundation Pakistan owns 100% of DPHL, establishing it as the ultimate parent entity of
Foundation Power.
Stability
The Company's ownership structure has historically been stable, with no anticipated changes, reflecting the
sponsors' commitment to maintaining their stake. The Fauji Foundation's involvement further ensures consistent
ownership and long-term support for the Company
Business Acumen
The sponsor, Fauji Foundation Group, is one of Pakistan’s largest and most diversified business conglomerates. Its
expansive portfolio encompasses energy generation, fertilizer production, cement manufacturing, and the
chemicals industry. Beyond the industrial sector, the Group maintains a strong presence in financial services,
healthcare, education, and infrastructure development. This broad diversification reflects its strategic foresight
and underscores its vital contribution to Pakistan’s economic progress. With a proven history of delivering complex
projects from inception to full-scale operation, Fauji Foundation’s depth of experience reinforces its credibility and
resilience as a dependable sponsor
Financial Strength
The Fauji Foundation Group is
distinguished by its robust financial stability and resilience, positioning it
to offer dependable support to its subsidiaries, including Foundation Power
Company, as needed. This financial strength not only ensures uninterrupted
operations, but also enhances stakeholder confidence and reflects the Group’s
commitment to long-term sustainability and success.
Governance
Board Structure
The Board of Directors (BoD) of the Company constitutes six members. All the representatives are from Fauji
Foundation. They provide valuable guidance and oversight to ensure the effective direction and management of the
Company.
Members’ Profile
Lt. Gen. Anwar Ali Hyder, HI(M), (Retd), serves as the Chairman of the Board of Directors. He is the CEO of Fauji
Foundation and Chairman of several companies within the Fauji Foundation Group. The other board members are
experienced professionals with a long-standing association with the Company
Board Effectiveness
The experience of BoD will help guide the management in developing effective operational and financial policies.
The BoD has formulated Audit, Tech and HR Committee to ensure smooth and effective monitoring of operations.
Participation of all BoD during board meetings remained satisfactory.
Financial Transparency
BDO Ebrahim & Co. Chartered Accountants has been engaged
as Foundation Power’s external auditors for FY25. The auditors expressed an
unqualified opinion on financial statements of the Company for the year ended June
30, 2025.
Management
Organizational Structure
Foundation Power has a lean management structure, mainly comprising nance, administration and technical staff.
The management control of the Company vests with Daharki Power Holdings Limited (DPHL), which, in turn, is
owned by Fauji Foundation.
Management Team
Maj Gen Amjad Ahmed Butt, HI(M) (Retd) is the Managing Director and CEO of the Company. He had a
distinguished career in the Pakistan Army. The rest of the management team is experienced and is capable of
handling the affairs of the Company
Effectiveness
The management of Foundation Power is engaged in Finance as well as Operational activities. The Company has
transitioned from outsourced O&M to self O&M and with experienced technical/operational team, envisages to
maintain the higher performance standards as demonstrated in the past
Control Environment
The Company maintains an adequate MIS, which helps the management track all operations effectively
Operational Risk
Power Purchase Agreement
Foundation Power’s primary source of earnings is the revenue
generated from the sale of electricity to the power purchaser, CPPA-G. The
Company is entitled to receive capacity payments as long as it maintains the
required benchmark availability and remains ready to supply electricity even if
no dispatch instructions are placed by the power purchaser. The agreement term is 25
years, commencing from the Commercial Operations Date (COD) in May 2011.
Recent developments in Pakistan’s power sector led the
Government of Pakistan (GoP) to initiate negotiations with Independent Power
Producers (IPPs), including the Company, to explore potential adjustments in
existing contractual arrangements. As a result of these negotiations, effective
May 27, 2025, the tariff structure for the Company has transitioned to a Hybrid
Take-and-Pay Model.
Operation and Maintenance
Foundation Power had initially entered into an O&M
contract with KEPCO for a period of 18 years, signed in 2008. However, the
Company has now transitioned to a self-managed O&M model. Since assuming
responsibility for its own operations and maintenance, the plant has been
running smoothly without any significant issues, reflecting the effectiveness
and reliability of the self-O&M arrangement.
Resource Risk
Foundation Power has entered into a Gas Supply Agreement (GSA) with Mari Petroleum for the supply of 65
MMCFD of Low BTU Gas to the plant. The contract, aligned with the PPA, is for a period of 25 years to ensure a
continuous gas supply. The construction and commissioning of the gas pipeline were completed in February 2009.
Insurance Cover
Foundation Power has sufficient insurance coverage for property damage and business interruption.
Performance Risk
Industry Dynamics
Pakistan’s installed power generation capacity reached
~46,605 MW in 9MFY25, up ~11% from ~42,131 MW in the same period last year,
primarily driven by ~2,813 MW added through net metering in renewable energy.
Despite the growth in capacity, actual power generation declined by ~2% to
~10,291 MW, resulting in a lower average capacity factor of ~22.1% (SPLY:
25.0%), highlighting underutilization within the system. Thermal generation
remains the largest contributor (~41,734 GWh), followed by hydel (~27,413 GWh),
nuclear (~17,175 GWh), and renewables (~3,823 GWh). While renewable capacity
additions have partially offset the impact of the government’s termination of
certain PPAs with Independent Power Producers (IPPs), thermal and coal-based
plants continue to dominate both installed capacity and generation. The sector
continues to face significant circular debt, currently estimated at ~PKR 2.4
trillion. To address this, the government plans to finance PKR ~1.25 trillion
through commercial bank loans over six years, with an additional PKR ~250
billion already allocated in the federal budget. The new debt will be recorded in
the books of the Central Power Purchasing Agency (CPPA-G).
Total sector borrowings stood at ~PKR 471.8 billion as of
end-June 2025, down ~7% from ~PKR 505.3 billion in the previous year. Long-term
loans (~PKR 272.1 billion) form the majority, while short-term borrowings (~PKR
190 billion) remain moderate. Coal- and thermal-based power plants account for
nearly half of total borrowings, with hydel, wind, and solar plants making up
the remainder.
Going Forward, the government is actively working to
introduce competitive electricity markets and implement broader power sector
reforms. These initiatives are still at early stages, and the full impact on
sector dynamics is yet to be disclosed.
Generation
During FY25, Foundation Power
generated 1,110 GWh of electricity, reflecting approximately 77% of
the contracted capacity. This compares with FY24 generation of 1,076 GWh, which
represented around 73% of the contracted capacity. The generation levels have
remained largely stable despite lower electricity demand, demonstrating the
plant’s consistent operational performance.
Performance Benchmark
Under the PPA, Foundation Power is required to maintain a
minimum availability of 88%. During FY25, the plant exceeded this requirement,
achieving an actual availability of 92.57%. Additionally, the plant’s efficiency
remained steady at 48.8%, in line with the agreed benchmark of 48.8%.
Financial Risk
Financing Structure Analysis
Foundation Power financed 75% of its project cost through a
syndicated term finance loan of PKR 11,565 million, priced at 6-month KIBOR
plus 2.93% per annum. The loan was fully repaid in March 2020.
Liquidity Profile
As of FY25, Foundation Power holds a sizeable short-term
investment portfolio of PKR 12,454mln, reflecting strong liquidity. This
liquidity was largely generated through the release of receivables from the
power purchaser under the amendment agreement, which resulted in receivables declining to PKR 6,701mln in FY25
from PKR 14,751mln in FY24.
Working Capital Financing
The Company manages its working capital through internal
cash generation and by extending payment terms with its gas supplier, Mari, a
related company. Additionally, the Company has secured short-term credit lines
totaling PKR 476 million, which remain unutilized during the year.
Cash Flow Analysis
The Company’s free cash flows from operations (FCFO)
amounted to PKR 3,335 million in FY25, compared to PKR 5,815 million in FY24.
The Interest Coverage Ratio (EBITDA/Finance Cost) improved to 20.9x in FY25, up
from 18.9x in FY24, driven primarily by lower finance costs following the full
repayment of the related-party loan during the year.
Capitalization
Following the repayment of the related-party loan, the
Company’s capital structure is largely debt-free, with no utilization
of short-term borrowings.
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