PACRA Maintains Entity Ratings of Liberty Power Tech Limited

Liberty Power Tech Limited (“the Company”) operates a 200 MW Residual Fuel Oil (RFO)-based power plant. The Company entered into a 25-year Power Purchase Agreement (PPA) with CPPA-G on a Take or Pay basis, effective from the COD in January 2011. However, under the recent power sector reforms, the Company has executed an amendment to the PPA, as proposed by the government’s task force, to convert the existing tariff structure into a Hybrid Take and Pay model. Under the revised arrangement, the capacity tariff has been reduced, along with certain indexation-related adjustments to other tariff components. In line with the agreement, the power purchaser has cleared the outstanding receivables of the Company as of November 2024, resulting in a significant reduction in receivables during FY25. Additionally, the Company has agreed to waive the outstanding delayed payment interest charged to CPPA-G up to October 31, 2024. Consequently, the Company’s topline declined compared to FY24, and reported a net loss during the period due to a one-time adjustment related to prior periods. Had there been no one-time adjustment, the Company’s profit would have been sizeable. During FY25, dispatch levels also decline relative to the previous year, with the plant operating at a capacity factor of 4.53%, generating 77,784 MWh versus 239,938 MWh (14% capacity factor) in FY24. The reduction in generation primarily reflects a shift in demand toward cheaper energy sources, such as hydro, local coal, solar, wind, and biogas, under the power purchaser’s cost-optimization strategy. Despite lower utilization, the Company continues to meet its availability and efficiency benchmarks, supported by a technically proficient O&M team, and has remained profitable in its power generation segment, if the one-time adjustment relating to prior year is excluded. The Company is managing its working capital requirements through a mix of internally generated cash flows and bank borrowings; however, in line with reduced demand, utilization levels remain minimal. The Company maintains a debt-free balance sheet, having fully repaid its project-related obligations earlier. In addition, it has developed a robust investment portfolio, generating steady income that supports profitability and helps cushion the impact of the revised tariff. This strong financial positioning enhances the Company’s flexibility and underscores its prudent capital management.
The assigned ratings are underpinned by the Company’s strengthened financial profile following the full repayment of its project-related debt, which has significantly enhanced its credit quality. The Company continues to demonstrate sound financial discipline; however, sustaining plant availability and operational performance in line with agreed benchmarks remains essential to maintaining the ratings. Despite sector-wide challenges, strong sponsor backing and a diversified investment portfolio provide solid liquidity support, ensuring continued financial stability and resilience.

About the Entity
Liberty Power Tech Limited was incorporated in September 2007 as an Independent Power Producer (IPP) under the Power Policy 2002. The Company is majority-owned by the Liberty Group, comprising the Mukaty Family (61%) and Liberty Mills Limited (29%), while Soorty Enterprises holds the remaining 10% shareholding. The Board of Directors consists of eight members, all representing the Liberty Group, which is primarily engaged in the textile sector. The Board is chaired by Mr. Ashraf Saleem Mukaty. The management team comprises qualified professionals with diverse experience across multiple sectors and is led by the Chief Executive Officer, Mr. Azam Sakrani.