Saif Power Limited ("SPL" or "the Company") was incorporated in Pakistan on November 11, 2004, as a public limited company under the repealed Companies Ordinance, 1984 (now replaced by the Companies Act, 2017), and began operations on April 30, 2010. The Company’s shares are listed on the Pakistan Stock Exchange Limited. SPL's primary activities include owning, operating, and maintaining a combined-cycle power plant with a nameplate capacity of 225 MW (ISO), and selling electricity to the Central Power Purchasing Agency Guarantee Limited (CPPA-G). On February 11, 2021, the Company amended its Implementation Agreement, which resulted in the replacement of the National Transmission and Dispatch Company (NTDC) with CPPA-G as the power purchaser. The plant, located in Qadarabad, District Sahiwal, primarily operates on RLNG supplied by Sui Northern Gas Pipelines Limited (SNGPL), with High-Speed Diesel (HSD) as the secondary fuel, provided by Shell Pakistan Limited.

Saif Power's key source of earnings is the generation tariff from the power purchaser, CPPA-G. Tariff consists of two components i.e. Energy Purchase Price (EPP) and Capacity Purchase Price (CPP). The Company has a levelized tariff of PKR 5.61 per Kilowatt hour (KWh) when plant operates on gas, while levelized tariff for HSD is PKR 15.52 per Kilowatt hour (KWh).

Saif Power has revised its ROE in respect of local equity to 17% from 15% with no dollar indexation, and for foreign equity to 12% from 15% with dollar indexation.

The principal sponsor of Saif Power Limited is Saif Holding Limited, which holds a ~23% stake in the Company. This is followed by the sponsor family, who collectively own ~27% of the shares. Other notable shareholders include Orastar Limited, with a ~17% shareholding, and various financial institutions, which collectively own ~15%. The remaining 17% of the shares are held by other investors.

The stability of the Independent Power Producers (IPPs) is largely derived from the agreements in place between the Company and the power purchaser. Additionally, the continued affiliation of the sponsors with the Saif Group provides further assurance, enhancing the Company's overall stability and credibility.

Saif Group is a prominent industrial and services conglomerate in Pakistan, with diversified operations spanning oil and gas exploration, power generation, textile manufacturing, real estate development, healthcare services, information technology, software development, and environmental management. Saif Holding Limited plays a key role in overseeing and assessing the business and investment activities of the Saif Group on a regular basis. Additionally, it provides consultancy services and other related support to the Group's associated companies, helping to guide and enhance their strategic initiatives.

The sponsors' financial strength is considered to be strong, supported by their engagement in a wide array of profitable and diversified businesses across multiple sectors. This diversification not only mitigates risks but also enhances the overall stability and resilience of their financial position, positioning them for sustained growth and success. The combination of their solid business foundations and successful operations in various industries further reinforces their financial strength.

Saif Power Limited is governed by a seven-member Board of Directors (BoD), not including the Chief Executive Officer (CEO). The Board includes five members who represent the Saif family, with the remaining two members serving as independent directors. The current Chairperson of the Board is Mr. Javed Saifullah Khan, who assumed this role following the tenure of Mrs. Hoor Yousafzai, the former chairperson. This leadership structure reflects a mix of family representation and independent oversight, ensuring a balanced approach to governance.

Mr. Javed Saifullah Khan serves as the Chairman of the Board of Saif Power Limited. A globally recognized business leader, Mr. Khan brings extensive expertise in launching new projects in emerging markets. He has held the position of Chairman at Saif Group for over three decades and also chairs the Boards of Saif Textile Mills Limited, Kohat Textile Mills Limited, and Saif Energy Limited. Mr. Khan is credited with the successful launch of Mobilink (now Jazz), the first GSM cellular company in the subcontinent, in a joint venture with Motorola. Under his leadership, Jazz has become the leading cellular company in Pakistan. He was the inaugural Chairman of Pakistan Mobile Communications Limited (PMCL) and served in that capacity until 2003, before continuing as a Board Member until 2014. In addition to his corporate achievements, Mr. Khan has played an influential role in various industry bodies. He served as Chairman of the All Pakistan Textile Mills Association (APTMA) for two terms, and as a Board Member of Pakistan International Airlines (PIA), Habib Bank Limited, and the Board of Investment of the Government of Pakistan. The other non-executive directors on the Board include: i) Mr. Osman Saifullah Khan, ii) Mrs. Hoor Yousafzai, iii) Mr. Assad Saifullah Khan and iv) Mr. Asif Saifullah Khan. The independent directors are: i) Mrs. Saima Akbar Khattak and ii) Mr. Rashid Ibrahim. The Board members possess a strong combination of qualifications and experience, with each member bringing valuable expertise to their respective roles, thus contributing to a robust and well-rounded governance structure for the Company.

The Board of Directors has established two key committees: the Audit Committee (AC) and the Human Resource & Remuneration Committee (HR & R Committee). The participation of all Board members in Board meetings has been consistently satisfactory, ensuring active involvement in decision-making processes. Mr. Rashid Ibrahim serves as the Chairman of the Audit Committee, while Ms. Saima Akbar Khattak is the Chairperson of the Human Resource & Remuneration Committee. These committees play a vital role in overseeing the respective areas of financial oversight and human resource management, contributing to the overall governance and strategic direction of the Company.

The Company maintains a fully operational website that offers relevant financial information to stakeholders. To uphold financial transparency, an internal audit department has been established, with its findings reported directly to the Board. The external audit of the Company is conducted by M/s GT Anjum Rahman & Co., Chartered Accountants, who have issued an unqualified opinion on the financial statements for the year ending December 31, 2023. The audit for the calendar year 2024 is currently underway.

The management of SPL plays an active role in managing relationships with lenders, NEPRA, the power purchaser, the operations and maintenance (O&M) operator, and in overseeing legal, technical, and commercial matters. A significant portion of SPL's staff is dedicated to finance-related functions, as the operations and maintenance of the plant have been outsourced to General Electric through an O&M contract. This structure allows the Company to focus on its financial and strategic management while relying on General Electric for plant operations and maintenance.

Mr. Sohail H. Hydari serves as the Chief Executive Officer of  SPL. He joined the Saif Group in January 2006. Prior to this, he spent over five years as the Chief Operating Officer of Gul Ahmed Energy. Mr. Sohail holds an MBA in Finance from the Institute of Business Administration in Karachi, as well as professional qualifications in Banking from Pakistan and in Insurance from the UK. Throughout his corporate career, Mr. Sohail has gained extensive, diversified experience across various industries, including advertising, banking, value-added textiles, and power generation. He has also worked with the Bank of Credit and Commerce International in several international locations, including Pakistan, Luxembourg, Germany, and Turkey. His final role at the bank was as the Country Head for Treasury and Investment Banking in Turkey. In addition to Mr. Sohail's leadership, the management team includes Mr. Muhammad Shakeel as the Chief Financial Officer (CFO), Mr. Waseem Ullah as the Company Secretary, and Mr. Ghias Ul Hassan as the General Manager of the Power Plant. The team is well-rounded and highly experienced, with each member bringing a wealth of expertise to their respective roles.

The effectiveness of SPL's management is crucial in driving the Company towards positive results. Their strategic leadership has streamlined the decision-making process, making it more systematic and efficient. This approach has empowered the organization to operate smoothly, adapt to changing circumstances, and consistently deliver strong performance, contributing to the Company’s long-term success and growth.

The Company has established a strong Management Information System (MIS) that enables the management to effectively monitor and track all operational activities while maintaining seamless communication with the O&M operator. To further ensure financial transparency, the Company has set up an internal audit department, which reports directly to the Board, providing an additional layer of oversight and accountability in its operations.

SPL's primary source of revenue is derived from the sale of electricity to the power purchaser, CPPA-G. The obligations of CPPA-G are guaranteed by the Government of Pakistan, providing a layer of security for the Company. Additionally, a stable revenue stream is further supported by the minimum guaranteed capacity charge, which is a component of the tariff that the Company receives regardless of the actual electricity production. The term of the Power Purchase Agreement (PPA) is set for 30 years, ensuring long-term revenue stability for SPL.

General Electric International, the O&M operator for Saif Power, is responsible for ensuring that the plant consistently meets the required performance benchmarks. Their role includes maintaining the plant’s efficiency and operational standards to ensure it operates at optimal levels, adhering to minimum performance criteria as outlined in the agreement.

SNGPL supplies the RLNG gas required for the operation of the facility, while HSD, used as a backup fuel, is sourced from Shell Pakistan. The risk associated with fuel resources is considered low due to the established agreements with both SNGPL and Shell Pakistan, ensuring a reliable and uninterrupted supply of fuel for the plant. These long-term agreements provide a stable fuel supply, mitigating the potential risk of disruptions and supporting the plant's consistent operation.

SPL maintains comprehensive insurance coverage to safeguard its operations and assets. This coverage ensures protection against various risks, including operational, financial, and physical hazards, providing the Company with a secure foundation to mitigate potential disruptions. The insurance framework is designed to support business continuity and safeguard against unforeseen events, contributing to the overall risk management strategy of the Company.

During FY24, Pakistan's power generation declined by 1.9%, totaling 127,160 GWh. This marks the second consecutive year of reduced output, driven by elevated electricity costs, rising inflation, and lower economic activity. The country's power generation remains heavily reliant on thermal and hydel sources, contributing approx. 45% and 31%, respectively, in FY24. The share of nuclear energy has notably increased to approx. 19% in FY24, while renewable energy sources continue to constitute a modest 5% of the total generation. Recently, the Government of Pakistan (GoP) resumed negotiations with IPPs and established a special task force to implement structural reforms in the power sector. The ongoing process aims to lower generation costs and make electricity more affordable, although the outcomes of these negotiations are yet to be seen.

SPL generated 133 GWh of electricity during the nine months ending in the calendar year (CY) 2024, as compared to 415 GWh in the corresponding period of the previous year (CY23: 440 GWh, CY22: 616 GWh). Consequently, the Company's revenue for the period declined to PKR 8,146 million in 9M CY24, compared to PKR 17,602 million in 9M CY23 (CY23: PKR 19,044 million). The decrease in generation is primarily due to a shift in electricity demand towards more affordable sources such as Hydro, Solar, Wind, and Biogas, which are now being prioritized as part of a cost-effective energy mix. This shift has resulted in reduced power purchases from Saif Power Limited.

The plant has consistently maintained an average availability in line with the agreed-upon performance parameters. However, the dispatch level for the 9MCY24 was 9.88%, a decrease compared to 31.01% during the same period last year.

SPL project capital structure consists of 24% equity and 76% debt. The debt portion, representing 76% of the project cost, was financed through a syndicated term finance loan. The total loan size amounted to PKR 12,907 million, with an interest rate set at 3-month KIBOR plus 3% per annum. The repayment period for the loan was structured over ten years, with forty consecutive quarterly installments beginning in June 2010. However, in April 2021, the Company successfully repaid the entire outstanding debt, clearing its financial obligations.

Circular debt remains a persistent challenge for the power sector, requiring Independent Power Producers (IPPs) to manage their liquidity needs through short-term borrowings (STB). As of the end of September 2024, the Company's STB limit stood at PKR 19,330 million, of which approximately 37% (PKR 7,231 million) has been utilized. This represents a reduction from the PKR 8,919 million utilized during the same period last year (CY23: PKR 11,669 million), indicating improved management of liquidity requirements.

The Company primarily meets its working capital requirements, including the procurement of gas/fuel and the funding of overdue receivables, through internal cash flow generation. As of September 2024, the total receivables stood at PKR 8,250 million, a reduction from PKR 11,472 million in the same period last year (CY23: PKR 9,159 million). However, receivable days increased significantly to 293 days, up from 180 days in September 2023, primarily due to a decline in revenue to PKR 8,146 million from PKR 17,602 million in the same period last year (CY23: 199 days). This increase in receivable days resulted in a rise in the net cash cycle, which escalated to 270 days in 9MCY24 from 182 days in 9MCY23 (CY23: 202 days).

During the 9MCY24, the Company recorded an increase in Free Cash Flow from Operations (FCFO), driven by higher profits compared to the loss reported in the same period of the previous year. FCFO for 9MCY24 amounted to PKR 2,600 million, up from PKR 2,288 million in the corresponding period last year (CY23: PKR 3,229 million). As a result, SPL has improved its debt coverage ratio, with the FCFO pre-working capital (WC) to Gross Interest + Current Maturity of Long-Term Debt (CMLTD) ratio rising to 1.7x, an increase from 1.3x in 9M CY23 (CY23: 1.1x).

As of September 2024, SPL's total borrowings amounted to PKR 7,746 million, with STB representing approximately 93%, or PKR 7,231 million. This marked a decrease from the total borrowings of PKR 12,416 million reported in CY23. Similarly, the STB reduced from PKR 11,669 million in CY23. As a result, the Company's leverage ratio improved to approximately 39%, a notable reduction from around 51% in CY23, reflecting better management of its debt obligations.