PACRA Maintains Entity Ratings of Foundation Power Company Daharki Limited

The ratings take comfort from the strong business profile of Foundation Power Company Daharki Limited (Foundation Power or the Company), supported by its long-term agreement with the power purchaser and its strategic association with Fauji Foundation (FF). Under the 25-year agreement, effective from May 2011, the Company initially received capacity payments, provided it maintained required availability benchmarks, even if electricity was not dispatched. Following recent sector developments, the Government of Pakistan engaged with Independent Power Producers, including Foundation Power, to explore potential adjustments in contractual arrangements. Consequently, the Company’s payment structure was revised, transitioning from the traditional capacity-based model to a Hybrid Take-and-Pay mechanism. Under this arrangement, the Company continues to receive a portion of guaranteed capacity payments while also earning additional returns linked to actual electricity generation, combining stable cash flows with operational incentives. The Company has moved from outsourced O&M to self-managed operations, supported by an experienced technical team, to maintain high operational standards. The plant is fueled by low BTU gas supplied by Mari Energies Limited, a related entity partially (40%) owned by Fauji Foundation, mitigating fuel supply risk. During FY25, the plant generated 1,109,787 MWh, representing approximately 77% of contracted capacity, compared to 1,076,000 MWh (73%) in FY24, reflecting stable operational performance despite lower overall electricity demand. Plant availability and efficiency remained satisfactory throughout the period. The Company’s financial profile remains strong. As of FY25, Foundation Power is debt-free following full repayment of the related-party loan. The Company holds a sizeable short-term investment portfolio, largely funded by the release of receivables from the power purchaser. Working capital management is strengthened by aligning payments to the fuel supplier with receipts from energy billing. Strong cash flow generation, coupled with a sound liquidity position, underpins the Company’s continued ability to meet operational and financial obligations.
Sustained operational performance and disciplined financial management are critical to maintaining the Company’s credit profile. While minor adjustments related to past receivables have been recorded, stable fuel costs, predictable cash flows under the Hybrid Take-and-Pay model, and adequate liquidity are expected to support ongoing healthy performance. Potential regulatory developments in the competitive energy market may influence sector dynamics, though such reforms are still at an early stage.

About the Entity
Foundation Power was established in 2005 under the Companies Ordinance 1984 as an independent power producer. The Company is operating a combined cycle power plant with a net initial capacity of 180MW. Foundation Power's plant commenced operations in May 2011. Foundation Power is wholly owned by Daharki Power Holdings Limited, which, in turn is a wholly owned subsidiary of Fauji Foundation. The Board constitutes of six members. All the representatives are from Fauji Foundation and provides adequate guidance to the company. Maj Gen Amjad Ahmed Butt, HI(M) (Retd), is the Managing Director of Foundation Power. He is assisted by a team of qualified professionals having requisite experience.