PACRA Maintains the Entity Ratings of Sindh Engro Coal Mining Company

The ratings reflect SECMC's strategic importance to Pakistan's energy landscape, underpinned by the Government of Sindh's majority ownership and the company's role in developing the country's indigenous coal resources. SECMC holds the mining lease for Block II of the Thar Coalfield, which contains approximately 1.6 billion tonnes of reserves—sufficient to support large-scale power generation over an extended horizon. The company operates Pakistan's first open-pit lignite mine and is the country's foremost coal producer. The project benefits from a well-defined regulatory framework under the Thar Coal Tariff Determination Rules, which provide for a cost-pass-through structure, guaranteed return on equity, and quarterly indexation mechanisms, ensuring revenue certainty and mitigating cost volatility. The Company has successfully commissioned Phase I (3.8 MTPA) and Phase II (3.8 MTPA, cumulative 7.6 MTPA) of the mine, achieving Commercial Operations Date (COD) for Phase I on July 10, 2019, and for Phase II on October 1, 2022. Coal is currently being supplied under long-term Coal Supply Agreements (CSAs) with Engro Powergen Thar (Private) Limited (EPTL), Thar Energy Limited (TEL), and ThalNova Power Thar (Private) Limited (TNPTL). Phase III expansion, targeting an additional 3.6 MTPA to cater to Lucky Electric Power Company Limited (LEPCL), is progressing, with financial close expected in August 2026 and COD anticipated upon finalization of financing arrangements. In terms of financial performance, the Company reported a revenue of PKR 24,808 million for 1QCY26, representing a 7.6% increase compared to the same period last year. Total revenue for CY25 stood at PKR 95,386 million. Revenue is generated through capacity payments and production payments under the tariff framework. In October 2025, the Thar Coal & Energy Board (TCEB) issued the initial MYT determination. The determination introduced an annual adjustment of tariff mechanism for historical over-recoveries. For 1QCY26, the Company recorded a gross profit of PKR 10,866 million, resulting in a gross margin of 43.8%. Net profit for the period amounted to PKR 7,739 million, corresponding to a net margin of 31.2%. On the debt front, Phase I and Phase II project debt continues to be repaid in accordance with the scheduled timelines.
Going forward, the ratings remain sensitive to the successful execution of Phase III expansion, particularly the timely finalization of financial close and the subsequent commencement of commercial operations, which will expand total mining capacity to 11.2 MTPA and diversify the Company's revenue base. Furthermore, working capital management—specifically the elevated trade receivables stemming from the power sector's circular debt—continues to warrant close attention; while the Company has demonstrated prudent liquidity management through a combination of internal cash generation and short-term borrowings, sustained improvement in receivable days and continued adherence to financial covenants will remain critical to the ratings.

About the Entity
Sindh Engro Coal Mining Company Limited, a public unlisted company incorporated in 2009, was established under a Joint Venture Agreement between the Government of Sindh, Engro Energy Limited, and Engro Corporation Limited to develop and operate an open-cast lignite mine in Block II of the Thar Coalfield. The Company's ordinary shares (~91.5% of total equity) are held by the Government of Sindh (~54.70%), Engro Energy Limited (~11.90%), Thal Limited (~11.90%), Habib Bank Limited (~9.50%), The Hub Power Company Limited (~8.00%), and CMEC Thar Mining Investments LTD (~4.00%), with the remaining ~8.5% comprising preference shares held by Huolinhe Open Pit Coal (HK) Investment Co. Ltd. The twelve-member Board includes five nominees from the Government of Sindh and seven from Engro and its affiliates, ensuring strong governance and institutional oversight.