PACRA Maintains Entity Ratings of LalPir Power Limited

The Ratings reflect the regulated structure of Lalpir Power Limited (Lalpir Power) business; whereby revenues and cash flows are guaranteed by the sovereign government given adherence to agreed operational parameters. A risk of any decrease in efficiency factor against the required benchmark would be borne by the Company itself given the fact, that Lalpir Power is managing its operations and maintenance (O&M) in-house. During the period under review, Lalpir Power continues to meet its availability and other performance benchmarks. During 6MCY24 Lalpir power generated 198Gwh of electricity as compared to 106Gwh same period last year depicting an increase of 87%. This increase is attributable to higher demand posted by the Power Purchaser. The Company reported improved topline as well (6MFY24: PKR 13,463mln, CY23: PKR: 19,471mln). In line with the revenues, margins has shown increase as well. Gross and Net margins for 6MCY24 clocked to 29% & 23% respectively. Currently, the leveraging stood at 27% representing short-term borrowing only (CY23: 25%). There is adequate cushion available to the company to meet its working capital requirement in its approved STB limits. Ratings stemmed from the fact that the long-term debt of the Company was fully paid successfully in June 2008.
Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels remain important. Delay in receiving the amounts from Power purchasers owing to the accumulation of circular debt remains a cause of concern. The PPA of the Company is expected to expire in CY 28, the Company plans / strategy in upcoming years with reference to utilization of plant after expiry remains imperative for the Ratings, going forward. Any change in regulatory requirements may affect the ratings.

About the Entity
Lalpir Power Limited was established for electricity generation under the power policy 1994 as an Independent Power Producer (IPP). The plant is located at Mehmood Kot, near Muzaffargarh (Punjab), and has an installed capacity of 362MW. The project has a remaining life of approx. 4 years under the PPA. The Company has entered into a contract for a period of thirty years for the purchase of fuel from PSO. Lalpir Power is listed on the Pakistan Stock Exchange. The major shareholder of the company is Nishat Group (46.68%) through individuals, associated companies, and related parties. Mian Hassan Mansha, heading the Nishat Group's interest in the power sector, is the Chairman of the board. All the board members are seasoned professionals with having interest in various sectors of the industry. The management team comprises of qualified professionals possessing sufficient experience in the power sector.