Engro PowerGen Thar (Pvt.) Limited (EPTL or the Company) was formed in 2014, 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 achieved commercial operations on July 10, 2019, and forms part of the China-Pakistan Economic Corridor (CPEC) energy portfolio, a flagship initiative for energy cooperation between China and Pakistan.

EPTL’s current tariff for July–September 2026 is 8.0 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 8.6 US¢/kWh represents the reference tariff, and 8.5015 US¢/kWh represents the levelized tariff for Engro PowerGen Thar (Pvt.) Limited.

EPTL's principal source of income is the revenue earned from Energy and Capacity invoices billed to the Power Purchaser, CPPA-G. The project's IRR, as agreed with NEPRA, stands at 20%, while its ROE stands 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 the strength and continuity of its sponsors — Engro Energy Limited, China Machinery Engineering Corporation (CMEC), Habib Bank Limited (HBL), and Liberty Mills Limited — each bringing sectoral expertise and a demonstrated long-term commitment to the project. This diversified and well-established sponsor base provides strong strategic backing to the company. Further comfort is derived from the long-term Power Purchase Agreement (PPA) with CPPA-G, backed by sovereign guarantees from the Government of Pakistan, which ensures a predictable revenue stream and reinforces the sponsors' continued confidence in the project.

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. 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, brings a well-capitalized balance sheet and strong capital adequacy metrics, enabling reliable access to liquidity and financial markets. Liberty Mills Limited (LML), a flagship textile and energy group, sustains steady cash flows and maintains a footprint in power and renewable energy investments. The sponsors’ combined financial strength underpins EPTL’s creditworthiness and long-term operating sustainability, reassuring stakeholders of the Company’s ability to meet its obligations in all scenarios.

The Board of Directors of Engro Powergen Thar Limited (EPTL) is composed of eight members, with representation reflecting the shareholding pattern of the company. Engro Energy Limited (EEL) nominates four 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. Sami Aziz, Mr. Zhao Wenke, Ms. Shi Baojun, Mr. Wang Pu, Mr. Abdul Qayoom, and Mr. Asad Khan 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.

The Board continues to adhere to the SECP Code of Corporate Governance, upholding accountability, and ethical conduct as foundational principles. For CY25, the financial statements were subjected to a comprehensive external audit by A.F. Ferguson & Co., Chartered Accountants, who issued an unqualified opinion stating that the Statement of financial position, Statement of profit or loss, Statement of comprehensive income, Statement of Changes in equity, and Statement of cash flows, present a true and fair view of the state of the Company’s affairs as at December 31, 2025.

IPPs are typically characterized by a flat organizational structure, comprising mainly finance and technical staff, with the plant’s operations 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. Mr. Wang Pu serves as Chief Financial Officer of EPTL, holding a Bachelor's degree in Accounting and Finance Management from the Central University of Finance and Economics, Beijing, and brings over 16 years of relevant experience, having been associated with the Company since 2020. The finance function is further supported by Ms. Ekta Sitani, who also serves as Chief Financial Officer for Engro Energy Limited and Engro Powergen Qadirpur Limited; a Fellow Chartered Certified Accountant (FCCA) with over 18 years of diverse experience across audit and assurance, internal controls, treasury, financial planning, and organizational strategy, she has been with Engro since 2020, having previously held leadership roles at Ernst & Young and Philip Morris International. On the operations side, Mr. Fazal Rehman Thebo serves as Chief Operating Officer of EPTL, bringing considerable operational and technical expertise to the Company's power generation activities. The rest of the management team is similarly well-rounded, comprising experienced professionals across engineering, operations, and finance whose collective expertise underpins EPTL's continued operational and strategic performance.

The management team's effectiveness derives from its stability, depth of experience, and alignment with the company's long-term objectives. Backed by an adequate MIS, the team maintains close oversight of operations and effective liaison with the O&M operator. Regular leadership meetings, strategic review sessions, and targeted operational briefings further reinforce this oversight, facilitating timely and cohesive action across all business units.

The control environment at EPTL 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 entered into a four-year O&M contract with Harbin Electric International Company Limited in 2025, with 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 (SECMC) for 30 years, under which SECMC provides 320,000 tons of coal per month. The Agreement remains an exclusive contract by which EPTL is allowed to use substitute (imported) coal only in case of non-availability of coal from the Supplier.

Insurance is attained for material damage and third-party liability, affecting the profits. Additionally, Marine, Terrorism, and Excess third-party liability insurances are also held.

As of March 2026, Pakistan's total installed generation capacity reached 49,651 MW, up 8.5% from 45,782 MW a year earlier, driven mainly by continued growth in net-metered distributed solar (7,319 MW cumulative), even as 13 thermal IPPs totalling 5,105 MW were retired or closed. Clean sources — hydel, nuclear and renewables combined — now account for the majority of installed capacity at 50.8%, up from 43.3% a year earlier, while thermal's share has fallen to 49.2% from 56.7%. Total generation for FY26 rose 1.2% YoY to 128,700 GWh, with combined local and imported coal generation climbing to 22.9% of the mix (up from 19.4% in FY25), led by a 51.6% YoY surge in imported coal as reduced RLNG availability and elevated LNG costs pushed dispatch toward coal. This dynamic sharpened further into Jul'26, when power demand rose 7.1% YoY to 15,122 MW and coal-based generation hit a record 3,819 GWh (+44% YoY, imported coal +90% YoY), even as the sector's adjusted fuel cost climbed to PKR 9.61/kWh and the FCA sought for the month — PKR 2.52/kWh above the reference tariff — was the highest since Jun'24.

The plant generated net electrical output of ~1,890.62 GWh during 1HCY26 (Jan–Jun 2026), up from ~1,867.02 GWh in 1HCY25. The delivered energy depends on the electricity demand from the power purchaser and the plant’s availability.

The required availability for EPTL under the PPA is 82.5% during the first five years and 85.5% for the next 25 years. Meanwhile, the required efficiency of the plant is 37%. On average, the plant maintained its required benchmarks through 1HCY26.

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, 2026, ~59% of the foreign debt and ~48% of the local debt had been repaid. 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, 2026, 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 Rs. 29,119.73 million (Dec-25: Rs. 28,536.24 million), with the majority within 0–90 days. Overdue balances from CPPA-G, as of June 30, 2026, stand at Rs. 12,380.61 million (Dec-25: Rs. 8,455.65 million), split as upto 30 days: Rs. 5,053.75 million, 30–60 days: Rs. 4,904.68 million, and 60–90 days: Rs. 2,422.18 million. These receivables are secured under the Implementation Agreement and are not considered impaired. To manage working capital and liquidity risks, the Company continues to utilize short-term borrowing facilities. As of June 30, 2026, against an aggregate limit of Rs. 19,230 million, Rs. 14,670.66 million (76.3%) was availed, while continuously monitoring secured and collectible receivables.

Gross working capital days improved markedly to 97 days as of 1HCY26 (Dec-25: 149 days), with trade receivable days declining to 94 days (Dec-25: 146 days). Net working capital days remained negative at (44) days (Dec-25: (13) days), as trade payable days of 142 continued to exceed combined receivable and inventory days, reflecting continued reliance on payables — largely to SECMC — to fund the working capital cycle, alongside continued utilization of short-term borrowing limits.

In 1HCY26, the company's Free Cash Flow from Operations (FCFO) stood at PKR 23,292 million, compared to PKR 48,223 million for the full year CY25. Coverage ratios strengthened further: EBITDA/Finance Cost improved to 4.6x (CY25: 3.8x; CY24: 2.5x) and FCFO/Finance Cost improved to 4.5x (CY25: 3.7x), aided by a decline in finance cost to Rs. 5,208 million for the half-year (full-year CY25: Rs. 17,465 million), reflecting both lower average debt balances following continued amortization and easing benchmark rates.

As of June 30, 2026, Engro Powergen Thar Limited's capital structure improved to approximately 51:49 debt-to-equity (Dec-25: 56:44; Dec-24: 62:38). Shareholders' equity stood at Rs. 98,872 million (Dec-25: Rs. 92,874 million; Dec-24: Rs. 85,495 million); including preference share capital, total equity was Rs. 108,596 million. Total borrowings declined to Rs. 104,729 million (Dec-25: Rs. 117,302 million; Dec-24: Rs. 138,354 million), continuing the company's multi-period deleveraging trend, supported by a net asset base of Rs. 98,872 million.