PACRA maintain Entity Ratings of Liberty Power Tech Limited

Liberty Power Tech Limited ('the Company') runs a 200MW power plant based on Residual Fuel Oil. The Company operates in the regulated power sector. The Company achieved its commercial operations in Jan'2011. The Power Purchase Agreement ('PPA') is with Central Power Purchasing Agency-Guaranteed ('CPPA-G') valid for 25 years on a 'Take or Pay' provision, starting from the COD (Jan-2011). It enjoys a sovereign guarantee against receivables from CPPA-G given adherence to agreed performance benchmarks. The Company continues to meet its availability (90%) and efficiency (45%) benchmarks. Fuel supply risk is adequately mitigated as they procure from different suppliers with good credit terms. During FY24, the Company generated 240 GWh (FY23: 545 GWh) of net electrical output, a decline of 44% (YoY), and reported a sales revenue of ~PKR 16,011mln (FY23: ~PKR 22,178mln), a decline of 28%. This decrease in generation is mainly attributed to the shift of electricity demand towards the less expensive sources of generation i.e., Hydro, Solar, Wind, and nuclear from the off-taker in the wake of a cost-effective energy basket. Despite a fall in revenue, margins benefitted from lower load factors and indexed-based tariff structure. Gross margin improved to 36% during FY24 (FY23: 20%). The Company successfully paid off its long-term project-related debt in Dec 2020 resulting in a favorable impact on its financial risk profile. The Company has arranged amicable working capital lines, to cover its working capital requirements and the debt profile comprises short-term borrowings only. The utilization of short-term borrowing stood at 0.6% as of June 2024 (Jun 2023: 65%), mainly on account of the release of receivables from the off-taker. Additionally, the sponsors of the Company have a vision to expand within the country's energy sector, which reflects the sound financial profile and strategic foresight of the organization.
The Company's management of the financing required to meet its plans and its impact on the financial risk profile remains integral to the assigned ratings. Furthermore and changes in the current regulatory structure may impact the ratings.

About the Entity
Liberty Power Tech was incorporated in Sep'07 as an Independent Power Producer under the Power Policy 2002. The Company is majorly owned by Liberty Group (Mukaty Family: 61% & Liberty Mills Limited: 29%) and Soorty Enterprises (10%). Liberty Power Tech has an eight-member Board of Directors with all members belonging to the Liberty Group, which is principally engaged in the textile sector and is led by Mr. Ashraf Saleem Mukaty, the acting Chairman. The management team is comprised of qualified professionals with sufficient experience in various sectors, led by the CEO, Mr. Azam Sakrani.