Narowal Energy Limited (NEL), a wholly owned subsidiary of Hub Power Company Limited, operates a 225 MW residual fuel oil (RFO)-fired power plant situated at Mouza Poong in Narowal, Punjab, approximately 150 km northeast of Lahore. The facility extends over an area of 62 acres and was completed in 2010, with commercial operations commencing on April 21, 2011. The plant is configured as an engine-based combined cycle power facility, comprising 11 generating units powered by MAN 18V48/60 engines, each with a rated capacity of 18.428 MWe. It also incorporates 11 Aalborg Heat Recovery Steam Generators and a single air-cooled condensing steam turbine supplied by Dresser-Rand, which contributes an additional 16.45 MWe to the overall output. Designed for continuous base-load operation, the medium-speed, four-stroke, turbocharged engines operate on RFO. Under ISO conditions, the plant achieves a net generation capacity of 225 MWe, with an average combined-cycle efficiency of approximately 45%.

Narowal Energy Limited (NEL), a wholly owned subsidiary of HUBCO, had executed an Amendment Agreement dated February 14, 2025 with the Government of the Islamic Republic of Pakistan (GoP) and the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G). The agreement forms part of the broader power sector reforms aimed at rationalizing capacity payments and enhancing the sustainability of the power sector. Under the revised arrangement, certain tariff components have been restructured, and the existing tariff regime has been converted to a Hybrid Take-and-Pay model. The Amendment Agreement became effective from November 1, 2024. Pursuant to the latest notification issued by the National Electric Power Regulatory Authority (NEPRA), NEL has been assigned a capacity tariff of PKR 2.2788/kWh for the quarter spanning April to June 2026. The approved capacity tariff comprises several components, including Return on Equity (ROE), Return on Equity During Construction (ROEDC), fixed Operations and Maintenance (O&M) expenses (both local and foreign), and the cost of working capital. The revised tariff framework has also introduced changes to the indexation methodology applicable to O&M expenses. Furthermore, the tariff components relating to the cost of working capital and O&M have been recalibrated in accordance with the amended contractual arrangements. The insurance premium component has also been rationalized, with the allowable tariff capped at 0.9% of the Engineering, Procurement, and Construction (EPC) cost. For the same period, the variable O&M tariff has been determined at PKR 2.7308/kWh. In line with the existing regulatory framework, all applicable tariff components remain subject to quarterly indexation based on movements in key economic variables, including the local and U.S. Consumer Price Indices (CPI), the PKR/USD exchange rate, and KIBOR. These adjustments are intended to preserve the real value of approved costs and mitigate the impact of inflation, currency fluctuations, and changes in benchmark interest rates. Separately, the energy tariff, which is adjusted on a monthly basis to reflect changes in fuel prices and other pass-through costs, stood at PKR 35.9145/kWh for March 2026, based on the latest available determination. Given the plant's residual fuel oil (RFO)-based generation profile, the energy tariff remains sensitive to fluctuations in international fuel prices and exchange rate movements.

Pursuant to the determination of National Electric Power Regulatory Authority dated May 27, 2025, the ROE and ROEDC components are payable under a Hybrid Take-and-Pay mechanism. Management has confirmed that the Amendment Agreement became effective on November 1, 2024, from which date the revised payment structure is applicable.

Narowal Energy Limited (“NEL” or “the Company”) is a wholly owned subsidiary of Hub Power Company Limited.

Narowal Energy Limited (NEL) demonstrates strong stability rooted in its ownership as a wholly-owned subsidiary of HUBCO, reflecting the sponsors’ sustained commitment to the power sector. This alignment ensures strategic continuity and reinforces NEL’s position within HUBCO’s diversified portfolio of Independent Power Producer projects. Supported by experienced management and integration with HUBCO allows NEL to leverage shared resources, including operations and maintenance services, enhancing efficiency and risk management. The company’s plant availability and ongoing investments by the parent entity further solidify its financial strength.

Under the leadership of Mr. Habibullah Khan, HUBCO Group, one of the largest conglomerates in the country with a primary focus on the power sector, has not only solidified its market position there but also demonstrated strategic business acumen through diversification across multiple sectors. The group has a proven track record of successfully executing projects from inception to operation, delivering consistent financial performance. Leveraging this expertise, more recently, HUBCO, through its subsidiary Mega Motor Company (Pvt.) Ltd., has strategically entered the electric mobility market in Pakistan via a joint venture with Mega Conglomerate Private Limited (MCPL), thereby expanding its portfolio into the high-growth sustainable transportation sector.

HUBCO’s financial strength is highlighted by a diverse investment portfolio and stable dividend streams from its various portfolio companies across the energy chain. This financial strength enables the sponsors to provide essential support to the Company whenever needed, ensuring resilience and growth.

Narowal Energy Limited (NEL) is overseen by a four-member Board of Directors, with all directors representing the Hub Power Company Limited, the parent entity. Considering the nature and scale of the Company’s operations, this board structure is deemed appropriate, providing sufficient oversight and effective strategic guidance.

Mr. Kamran Kamal, Chief Executive Officer and Chairman of Narowal Energy Limited (NEL), is an energy technology and policy specialist with extensive experience in business strategy, wholesale electricity market reforms, electricity derivatives, energy technology evaluation, and large-scale infrastructure project structuring. He also serves as the CEO of Hub Power Company Limited and has held various strategic and executive roles within the group, leading major capital projects and driving organizational and business outcomes at leadership and board levels. Mr. Aly Khan is the Chairman of Haleeb Foods Limited and a Director at Qasim International Container Terminal, and is also a SECP-certified director in corporate governance. With over a decade of international experience across London, Singapore, and New York, he has worked with Citigroup and Yang Ming Marine Transport Corporation in various management roles, and in Pakistan has contributed to key ventures, including leading the development of the country’s first commercial LEED-certified building. Mr. Amjad Ali Raja has been associated with the HUBCO Group since 2013, serving in multiple leadership roles before being appointed CEO of Thar Energy Limited and ThalNova Power Thar Limited in July 2024; with an engineering background and over 22 years of experience in the energy sector, he brings strong technical expertise and project leadership capabilities. Mr. Jawwad Ahmed Shakir is a seasoned finance professional with more than 17 years of experience in Pakistan and internationally, having started his career as an Audit Trainee at PwC Pakistan and later working in Risk Advisory Services at PwC. He joined the Company in 2007, where he held key roles across joint venture accounting, accounts payable, and taxation before heading the accounting function, and also undertook an international assignment in Mozambique, where he served for nearly seven years as Chief Accountant.

For effective oversight, the Board convenes meetings on a regular and need-based basis to deliberate on matters pertaining to the Company and its plant operations. The attendance of Board members at these meetings remains satisfactory, ensuring robust supervision of the Company’s affairs and enabling the provision of timely and informed guidance to management on key strategic and operational matters.

The Board and management ensure the timely preparation of financial statements that incorporate all material disclosures, with the information presented therein being complete, accurate, and fairly stated. For the financial year FY25, the Company has appointed A. F. Ferguson & Co. as its external auditor, further reinforcing the integrity and reliability of its financial reporting framework.

The Company deploys a streamlined organizational structure with proper reporting lines and a hierarchical structure. As of June 30, 2025, the total number of employees was recorded at 60, including seconded/permanent as well as contractual employees. Each division is headed by a senior resource reporting directly to the CEO.

Mr. Kamran Kamal has been serving as the Chief Executive Officer of the Company since 2021. He possesses extensive experience in Pakistan's energy and power sector and has been associated with the HUBCO group in various leadership and strategic roles over the years. In addition to his role at the Company, he currently serves as the Chief Executive Officer of The Hub Power Company Limited (HUBCO) and holds directorships on the boards of several group companies, providing strategic oversight across the Group's diversified energy portfolio. The senior management team comprises experienced professionals with the requisite technical, operational, financial, and commercial expertise across their respective functional areas. Supported by established organizational structures and reporting lines, the management team provides continuity in leadership and contributes to effective decision-making, operational efficiency, and the execution of the Company's strategic objectives.

The management monitors overall performance to maintain optimal effectiveness and ensure continuous improvement. Furthermore, the management is supported by the board in key decisions, which ensures operational stability and strategic success.

The Company has established a robust internal audit function to ensure adherence to internal policies and the effective maintenance of corporate records and information. This function is tasked with assessing the accuracy, completeness, and reliability of key financial and operational data, including billing, invoicing, receivables, payables, inventory, and generation statistics, thereby ensuring the absence of material misstatements. In parallel, management regularly obtains detailed operational reports from the O&M contractors to facilitate ongoing oversight and ensure the efficient and uninterrupted operation of the plant.

The electricity generated by Narowal Energy Limited (NEL) is transmitted to the national grid through the National Grid Company of Pakistan Limited under a Power Purchase Agreement (PPA) dated November 20, 2008, with a tenure of 25 years commencing from the Commercial Operations Date (COD) of April 21, 2011. The PPA was renegotiated in 2024 as part of broader power sector reforms initiated by the Government of Pakistan to address the rising circular debt. More recently, in February 2025, the Company entered a new operational phase and formalized an Amendment Agreement with the Government of Pakistan and CPPA(G), introducing revisions to the tariff structure and transitioning the return on equity component to a hybrid take-and-pay model.

The operations and maintenance (O&M) of the plant were outsourced to Hub Power Services Limited, a wholly owned subsidiary of Hub Power Company Limited, with effect from April 22, 2016, to ensure optimal plant availability and operational efficiency. In addition to Narowal Energy Limited, HPSL also provides O&M services to other power generation assets within the HUBCO group.

The Company maintains arrangements for the procurement of Residual Fuel Oil (RFO) to support uninterrupted plant operations and comply with the fuel inventory requirements stipulated under the Power Purchase Agreement (PPA). Historically, the Company entered into a long-term Fuel Supply Agreement (FSA) with BE Energy Limited (formerly Bakri Trading Company) for the supply of furnace oil. Subsequently, pursuant to NEPRA's approval dated March 26, 2025, the Company was permitted to procure RFO from its parent company, HUBCO, at the minimum delivered price, including applicable freight and commercial margins, subject to a cap based on the average actual procurement price incurred by HUBCO. This arrangement provides the Company with greater procurement flexibility while leveraging group-level sourcing efficiencies. While fuel supply and inventory management risks continue to rest with the Company, the availability of multiple procurement avenues, strengthens supply-chain resilience and enhances the reliability of fuel availability for ongoing operations.

Narowal Energy Limited has adequate insurance coverage for property damage and business interruption. The insured values for damages include property damage, partially disturbed amount of US$ 1.783 million (up to PKR 509.6mln) & business interruption cover.

As per the latest available data, Pakistan’s total installed power generation capacity stood at approximately 41,121 MW in FY25, reflecting a decline of around 10.4% year-on-year (FY24: ~45,888 MW), while actual power generation averaged approximately 15,420 MW, down by 1.5% YoY, indicating continued demand-side constraints and underutilization within the system. During 9MFY26, total electricity generation reached 93,131 GWh, registering a 3.3% YoY increase. The country’s energy mix has undergone a gradual structural shift away from thermal sources, with thermal generation declining to approximately 49.0% in FY25, while hydel and nuclear contributions increased to around 30.0% and 17.0%, respectively. Against total annual generation of approximately 135,079 GWh in FY25, the combined share of hydel and renewables remained stable at around 34.0%, indicating consistency in non-thermal contributions. RFO-based generation continues to experience a significant structural decline, with output dropping sharply to 151 GWh in June 2025 (down 42.6% YoY from 263 GWh in June 2024) and further to 91 GWh in March 2026. This contraction is primarily driven by cost competitiveness, as RFO-based plants exhibit substantially higher variable costs relative to coal-, RLNG-, and gas-based alternatives. Consequently, lower-cost sources—particularly local coal and hydel—have captured a larger share of dispatch, pushing RFO-based IPPs further down the merit order and restricting their utilization largely to peak demand periods or hydel shortfalls. This trend is further reinforced by the government’s strategic focus on reducing dependence on imported fuels and promoting indigenous energy sources, including local coal, nuclear, and renewables. Overall, the outlook for RFO-based generation remains challenging, with sustained underutilization expected amid the ongoing transition toward a more cost-efficient and domestically oriented energy mix.

During 9MFY26, Narowal Energy Limited (NEL) recorded net electricity generation of 82 GWh, compared to 22 GWh in the corresponding period of 9MFY25, indicating a partial recovery in output despite an overall subdued dispatch environment. The relatively low dispatch levels remained primarily attributable to the lower cost of electricity offered by other thermal independent power producers (IPPs), particularly coal- and RLNG-based plants, which continued to limit demand for RFO-based generation.

The plant remained fully available throughout the period, maintaining availability levels consistently above the 95% threshold stipulated under the Power Purchase Agreement, with availability recorded at 98% during 1HFY26. Despite this strong operational performance, dispatch levels remained constrained, resulting in a modest load factor of 6% in 9MFY26, compared to 2% in 9MFY25. On the merit order, Narowal Energy Limited was positioned 48th, primarily due to its reliance on RFO-based generation. The subdued dispatch was largely driven by the comparatively lower marginal cost of electricity from alternative thermal IPPs, particularly coal- and RLNG-fired plants, which continued to suppress demand for RFO-based generation.

The Company fully repaid its long-term project debt by July 2021 and, as a result, currently carries no outstanding long-term borrowings on its balance sheet.

As of Mar 2026, NEL has outstanding receivables of PKR 3,741 million from CPPA(G), primarily related to capacity and energy invoices and interest accrued on delayed payments. 

The the Company has relied on short-term borrowings to manage working capital requirements. As of Mar 2026, total outstanding short-term borrowings declined to PKR 195 million, down from PKR 655 million at the end of June 2025.

The Company’s cash flow position weakened during the period, with Free Cash Flow from Operations (FCFO) declining to PKR 1,439 million in 3QFY26 from PKR 2,746 million in 3QFY25, primarily due to tariff revision and reduced demand for RFO-based generation. Despite this decline, the Company is able to meet its financing obligations. The Company's interest coverage ratio (EBITDA/Finance Cost) improved markedly to 236.4x in 3QFY26 from 57.1x in 3QFY25, supported by a lower debt burden following the repayment of long-term obligations and limited reliance on short-term borrowings.

Following the full repayment of its long-term project debt and a decline in plant dispatch, the Company’s leverage profile remains minimal, reflecting limited reliance on short-term borrowings to meet operational requirements. The leverage ratio stood at 1.2% as of March 2026, underscoring a strong equity base and a highly conservative capital structure. In addition, the accumulation of retained earnings over time has further strengthened the Company’s equity position, supporting its track record of consistent dividend distributions in prior periods.