PACRA Maintain Entity Rating of Lucky Electric Power Company Limited

Lucky Electric Power Company Limited (LEPCL or the Company) operates a 660MW supercritical coal-fired power plant at Port Qasim, Karachi, under a 30-year Power Purchase Agreement (PPA) with CPPA-G. The ratings are underpinned by the Company’s strategic importance, arising from its inclusion in the China-Pakistan Economic Corridor (CPEC), and reinforced by its ability to operate on local coal. The assigned ratings also draw comfort from the Company’s strong sponsorship profile, as it is wholly owned by Lucky Cement Limited, a part of the Yunus Brothers Group (YBG)—one of Pakistan’s most diversified conglomerates with an established presence across cement, textiles, real estate, power, chemicals, pharmaceuticals, food, and automotive sectors. The Company benefits from explicit financial support from YBG, providing stability and enhancing its ability to manage liquidity pressures. The PPA structure provides revenue stability through capacity payments and coverage of fuel costs, even under lower dispatch scenarios, subject to the plant maintaining the required availability of 85%. During FY25, the plant generated 1,018.68 GWh of electricity while maintaining availability in line with benchmark levels. Operational risks are mitigated through a 7-year O&M agreement with Harbin Electric International Co., Ltd. Fuel supply is supported by coal agreements with SECMC (Thar coal), under an MoU to utilize Thar coal when available, while the plant currently operates on imported coal sourced from Indonesia through multiple suppliers. The Company has achieved full Shariah compliance, with the SECP issuing a Shariah Compliance Certificate on March 3, 2025. Liquidity management remains impacted by persistent circular debt in the power sector, as reflected in trade receivables of PKR 19,386 million as of June 30, 2025. The Company relies on internal cash generation and short-term borrowings to meet its working capital requirements. Additionally, it has issued multiple Sukuks to bridge these working capital gaps. The capital structure is gradually improving, supported by sustained profitability and the ongoing repayment of project debt. Importantly, no renegotiations have been initiated with respect to CPEC power projects under the ongoing power sector reforms; therefore, the original terms of the PPA and tariff remain intact, with no changes in the tariff structure.
Sustained operational performance, continued adherence to availability benchmarks, and disciplined financial management remain critical to maintaining the Company's credit profile. A stable capacity-based payment structure provides additional comfort. While the Company remains well-positioned within its contractual framework, continued stability in the regulatory environment will further support the ratings.

About the Entity
Lucky Electric Power Company Limited was incorporated in Pakistan on June 13, 2014, as a public unlisted company and is a wholly-owned subsidiary of Lucky Cement Limited. The Company operates a 1x660MW local coal-fired supercritical power plant at Port Qasim, Karachi, on a Build-Own-Operate (BOO) basis. The plant achieved Commercial Operation Date (COD) on March 21, 2022, and sells electricity to CPPA-G under a 30-year Power Purchase Agreement. The Board is chaired by Mr. Muhammad Ali Tabba, with Mr. Ruhail Muhammad serving as Chief Executive Officer.