The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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

Rating Type Entity
(23-Sep-22 )
(23-Sep-21 )
Action Maintain Maintain
Long Term AA- AA-
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Engro Energy Limited (EEL) along with China Machinery & Engineering Corporation (CMEC) has set up first Thar coal based (2 x 330 MW) power plant (Complex) - Engro Powergen Thar (Pvt.) Limited (EPTL). Since its COD in July’19, EPTL is running its operations smoothly and sustainably and achieving operational benchmarks. The primary fuel is Thar Coal; however, the plant can accommodate imported coal. A 30-year coal supply agreement is signed with Sindh Engro Coal Mining Company (SECMC), which is operating a coal mine in Thar Block-II. Company's both units were successfully connected to and are providing electricity to the grid. During 1HCY22 the plant generated net electrical output of ~1,504GWh (1HCY21: ~2,052GWh) and subsequently recorded revenue of PKR ~38,990mln. The fall in generation was due to the scheduled outage of the plant during March and April for rehabilitation work after the unforeseen fire incident that took place at the coal conveyor belt system. The financial strength and experience in the energy chain of the sponsoring companies – EEL and CMEC – is positive to the ratings. The Government of Pakistan has given payment guarantee against dues from CPPA-G. However, mounting trade receivables of PKR ~42,778 (June’21: PKR ~39,748) remains a cause of concern. To finance its working capital needs, the company has utilized 100% of its lines amounting to PKR 11,000mln. The company has successfully repaid approximately 30% of its project debt. As of June 2022, the company has Long term debt obligations including current maturity amounting to PKR ~116,030mln.
The assigned ratings reflect the sponsors strength along with guarantee provided by the power purchaser. Going forward, the Company’s main focus would be to keep the plant operational and meet required benchmarks along with timely repayment of debt obligations.

About the Entity
EPTL, incorporated in September 2014, has set up a 2 x 330 MW Coal-based Power Plant under the 2002 Power Policy. The Company is a special purpose vehicle. It is the first indigenous coal-based Power Plant of Pakistan in Thar Block – II, Sindh, for a total cost of USD 1.1bln, having a D/E ratio of 75:25. EPTL's majority ordinary shares are owned by Engro Energy Limited (EEL) (50.1%) and China Machinery Engineering Corporation (CMEC) (35%), while the remaining stake is owned by Habib Bank Limited (HBL) (9.5%) and Liberty Mills Limited (LML) (5.4%). Engro Energy Limited (EEL) is 100% owned subsidiary of Engro Corporation.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.