PACRA Maintains the Entity Ratings of Engro PowerGen Thar (Pvt.) Limited

Engro Powergen Thar (Pvt.) Limited ("EPTL" or "the Company") owns and operates Pakistan's first indigenous lignite coal-fired, mine-mouth power plant, comprising two 330MW units at Thar Block II, Sindh, which achieved commercial operations on July 10, 2019, and forms part of the China-Pakistan Economic Corridor (CPEC) energy portfolio. The Company draws considerable strength from the Engro Group, one of Pakistan's leading conglomerates with a strong and consistent track record in the energy sector, further supported by its other sponsors who bring complementary engineering, financial, and industrial expertise to the project. Electricity generated is sold to the Central Power Purchasing Agency (CPPA-G) under a 30-year Power Purchase Agreement, with the power purchaser's obligations backed by a sovereign guarantee of the Government of Pakistan, lending predictability to the Company's revenue stream through an indexed, cost-plus tariff mechanism. Pakistan's power sector continued to expand over the period, with installed generation capacity reaching 49,651 MW by March 2026 (up 8.5% year-on-year), led chiefly by continued growth in net-metered solar capacity; clean sources – hydel, nuclear, and renewables – now constitute the majority of installed capacity at 50.8%, even as coal-based generation, both local and imported, gained further share within the energy mix amid reduced RLNG availability and elevated LNG costs. Given its reliance on indigenous coal, EPTL's comparatively low tariff continues to position the plant favorably in the merit order maintained by the National Power Control Centre (NPCC), translating into consistently strong dispatch. Within this context, EPTL generated net electrical output of ~1,890.62 GWh during 1HCY26 (1HCY25: ~1,867.02 GWh), with delivered energy continuing to be governed by offtake demand from CPPA-G; the plant sustained the required PPA performance benchmarks throughout the period. Fuel supply risk remains well mitigated through a 30-year Coal Supply Agreement with Sindh Engro Coal Mining Company (SECMC), EPTL's exclusive coal supplier, which provides 320,000 tons of coal per month, with recourse to imported coal permissible only in the event of non-availability from SECMC. Receivables remain concentrated with CPPA-G, the Company's sole customer, with total trade debts of Rs. 29,119.73 million as of June 30, 2026 (Dec-25: Rs. 28,536.24 million), of which overdue balances stood at Rs. 12,380.61 million, reflecting persistent sector-wide circular debt pressures; correspondingly, trade payables – predominantly to SECMC – continue to be leveraged to manage the working capital cycle, with gross working capital days improving to 97 days (Dec-25: 149 days). Financial performance during 1HCY26 remained robust, with net sales of Rs. 55,766 million and net profit of Rs. 15,326 million, translating into a net margin of 27.5%, while coverage metrics strengthened further, with EBITDA/Finance Cost improving to 4.6x (CY25: 3.8x), aided by a decline in finance cost amid continued debt amortization and softer benchmark rates. Total borrowings declined to Rs. 104,729 million (Dec-25: Rs. 117,302 million), extending the Company's multi-period deleveraging trend and improving the debt-to-equity position to ~51:49 (Dec-25: 56:44), underpinned by shareholders' equity of Rs. 98,872 million.
The ratings remain contingent on the plant sustaining its required availability and generation levels, timely servicing of debt obligations, and continued generation of healthy cash flows, alongside the Company's continued responsiveness and adaptability to evolving sector reforms and regulatory developments.

About the Entity
Engro Powergen Thar (Private) Limited (EPTL), incorporated in 2014 under the CPEC framework, is located in Thar Block II, Sindh. The project, at a cost of USD 1.1 billion, achieved commercial operations in July 2019 and was financed through a 75:25 debt-to-equity structure. EPTL's sponsors include Engro Energy Limited (50.1%), China Machinery Engineering Corporation (35%), Habib Bank Limited (9.5%), and Liberty Mills Limited (5.4%), while CMEC also holds USD 85 million in preference shares.