PACRA Assigns Initial Rating to Lucky Electric Power Company Limited - PPSTS-23 - PKR 6bln - Mar-26

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 PPA with CPPA-G. The ratings are underpinned by the Company's strategic importance arising from its inclusion in CPEC and its ability to operate on local coal. The ratings also draw comfort from the Company's strong sponsorship profile, as it is wholly owned by Lucky Cement Limited, part of the Yunus Brothers Group (YBG) - one of Pakistan's most diversified conglomerates. 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, 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. The Company generated a topline of ~PKR 70,080mln during FY25 and ~PKR 34,490mln during 1HFY26, reporting a bottom line of ~PKR 20,707mln during FY25 (FY24: ~PKR 19,533mln). Operational risks are mitigated through a 7-year O&M agreement with Harbin Electric International Co., Ltd. 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, with trade receivables of PKR 19,386 mln as of June 30, 2025. 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. The company has issued PPSTS-23 in March 2026, which will mature in September 2026.
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
LEPCL was incorporated in Pakistan on June 13, 2014, as a public unlisted company at Port Qasim, Karachi, Sindh. Lucky Cement Limited owns 100% shareholding of LEPCL and stands as the flagship company of the Yunus Brothers Group. The Company's Board comprises eight directors, including the Chief Executive Officer, with all board members representing Lucky Cement. Mr. Muhammad Ali Tabba, the Chairman, has been associated with the Group in different capacities for nearly three decades and currently chairs the Board with his visionary leadership and vast experience.

About the Instrument
Lucky Electric Power Company Limited (LEPCL) has issued a rated, unsecured, unlisted, privately placed Short Term Sukuk, PPSTS-23, amounting to PKR 6,000 million, inclusive of a green shoe option of PKR 2,000 million, in March 2026. The Sukuk have a maturity date of 17 September 2026 and are issued to meet the Company’s working capital requirements. The instrument carries a profit rate of 3-Month KIBOR minus 10 basis points, with both profit and principal payable at maturity.