Master Green Energy Limited (MGEL), incorporated in May 2015, is a Renewable Energy Independent Power Producer (RE IPP) under the Renewable Energy Policy 2006. It is the second energy project by Master Group, following Master Wind Energy Limited. MGEL contributes to Pakistan’s clean energy goals by harnessing wind resources in the Sindh wind corridor. MGEL has developed a 50 MW wind power plant on a Build, Own, and Operate (BOO) basis near Taluka Kotri, District Jamshoro, Sindh. The project spans 300 acres of land leased from the Government of Sindh for 30 years. The plant received its generation license from NEPRA on November 27, 2017, and achieved Commercial Operations Date (COD) on August 21, 2021.

MGEL is awarded cost-plus tariff for wind power projects by NEPRA. Under the 2019 NEPRA tariff determination for wind IPPs, the Company has a generation tariff PKR 7.2396 per Kilowatt hour (kWh) for years 1-10 and generation tariff of PKR 2.3726 per Kilowatt hour (kWh) for years 11-25. The levelized tariff for the project is US¢ 13.8680/kWh at the Jan-Mar 2025. The tariff is revised every quarter which was as follows: (Q2 2025: PKR 13.9754; Q1 2025: PKR 14.2730). The tariff remains average 0.52 US¢ based on interbank US$ to PKR rate. The tariff structure is indexed to key economic indicators, including the PKR-USD exchange rate, U.S. CPI, and domestic CPI inflation. The non-escalable component includes the principal repayment of local debt and insurance costs, while the escalable component covers foreign debt servicing, Return on Equity (ROE), and fixed Operation & Maintenance (O&M) costs.

The Internal Rate of Return (IRR) for Master Green Energy Limited’s 50 MW wind power project, as approved by NEPRA, is 14%. The project’s primary revenue stream is the sale of electricity to the Central Power Purchasing Agency (CPPA-G) under a long-term Power Purchase Agreement (PPA).

Master Green Energy Limited (MGEL) is wholly owned by Master Group, with 99.99% of its shareholding held by associated companies. The ownership is equally divided among three brothers through their respective holding companies: Nadeem Malik Holdings (Pvt.) Ltd., NM Holding (Pvt.) Ltd., and Najeeb Holdings (Pvt.) Ltd., each holding 25.67%. Additionally, Master Textile Mills Ltd. holds a 23% stake, reflecting the Group’s consolidated investment in MGEL through internal shareholding.

Master Group has a long history spanning over 50 years. The flagship company Master Enterprises (Pvt.) Ltd established in the year 1963. The Group gradually diversified in various industries with operations across textile, engineering, automobile and retail sectors. It is one of the leading Industrial groups in the country.

Master Group’s business acumen is evident in its successful expansion into multiple industries beyond its origins in foam manufacturing. The Group operates a wide-ranging portfolio that includes Master Textile, a key player in the textile sector; Master Motors, a prominent name in the automotive industry; Procon Engineering, which supplies components to global automotive brands; and Celeste, known for high-end sleep products. It has also ventured into the retail space with Master Offisys, offering premium office furniture solutions. This strategic diversification reflects the Group’s strong market insight, adaptability, and commitment to sustainable growth, all of which contribute to the sound management of Master Green Energy Limited.

The sponsors of Master Green Energy Limited possess strong financial strength, backed by a diverse portfolio of profitable and well-established businesses. Their stable revenue streams across multiple sectors, provide a decent foundation to support the long-term sustainability and financial commitments of the project. Additionally, the SBLC given by the parent adds to their commitment towards the project.

MGEL’s Board of Directors comprises three members, including the Managing Director. All board members are representatives of the Master Group.

Mr. Nadeem Malik is the Chairman of the Board of Master Green Energy Limited and has been associated with the Master Group for over three decades, serving as Chairman across various Group companies. He brings extensive leadership experience and strategic vision to the Board. Mr. Najeeb Malik, also a long-standing member of the Master Group, currently serves as a Director on the Board of MGEL and contributes to the company's governance and strategic planning.

The experience and leadership of MGEL’s Board of Directors play a key role in guiding the Company’s strategic direction. Their deep understanding of business operations and financial management supports the development of effective operational and financial policies, ensuring strong governance and long-term sustainability of the project.

Master Green Energy Limited ensures strong financial transparency through regular audits by Yousuf Adil, one of Pakistan’s top audit firms. For the year ended June 2024, the auditors issued an unqualified opinion, reflecting accurate financial reporting and compliance with accounting standards.

MGEL has a lean organizational structure. The company has a well-defined lean organizational structure with a professional management team in place to monitor the operations and assure control mechanisms.

The management team of MGEL is led by Mr. Shahzad Malik, Managing Director & CEO, who holds an MBA from the USA and has over 10 years of experience in foam and energy businesses, with expertise in wind energy projects. He also serves as Managing Director of Master Green and sits on the boards of various Master Group companies. Mr. Rumman Arshad Dar, the Chief Operating Officer, brings over 20 years of experience in the energy sector, contributing significantly to the company’s operations and growth. The CEO reports directly to the Managing Director.

MGEL’s board effectiveness is reflected in its strong governance, strategic oversight, and commitment to long-term value creation. The board plays a vital role in guiding the company’s vision, ensuring accountability, and supporting the executive team in key decisions. Its diverse expertise and active involvement have contributed to transparent, timely, and well-informed decision-making, fostering sustainable growth and organizational resilience.

Master Green Energy Limited maintains a structured control environment supported by advanced technological systems. The Company leverages Oracle EBS R12 software to enhance operational efficiency and ensure robust control across various functions. Additionally, the use of SCADA systems in wind turbines allows for real-time monitoring and performance optimization. The Company’s IT infrastructure is reliable and effectively supports its operations, with the scope and quality of activities consistently meeting satisfactory standards. However, the absence of an internal audit function and audit committee highlights an area for potential improvement in strengthening overall governance and risk management practices.

Master Green Energy Limited operates under the Renewable Energy Policy 2006, with a long-term Energy Purchase Agreement (EPA) signed with the Central Power Purchasing Agency Guarantee Limited (CPPA-G). The agreement has a tenure of 25 years, starting from the Commercial Operations Date (COD) in August 2021. Accordingly, the EPA will remain in effect until August 2046, providing a stable and predictable revenue stream for the project throughout its operational life.

Long-term O&M contract for remote monitoring and services has been established with Siemens Gamesa Renewable Energy (SGRE). Additionally, Al-Bario Engineering (Pvt) Limited has been contracted to deliver non-remote O&M services for the long term, ensuring the ongoing smooth operation and maintenance of the project.

Under the Renewable Energy Policy 2006, resource risk refers to the variability in wind speed, which directly impacts the energy output of a wind power project. For Master Green Energy Limited (MGEL), this means that any fluctuation in wind speed affecting electricity generation is a risk borne by the Company. As outlined in the Energy Purchase Agreement (EPA), MGEL is solely responsible for lower electricity generation resulting from reduced wind availability, making accurate forecasting and site selection critical to managing this risk effectively.

Master Green Energy Limited (MGEL) has secured comprehensive insurance coverage to safeguard its operations. The Company has partnered with Adamjee Insurance and Alfalah Insurance to provide robust protection against a range of risks. The insurance cover includes all major risks, such as business interruption, third-party liability, political violence, and property damage, ensuring that MGEL is well-protected from potential disruptions and unforeseen events that could impact its business and operations.

Pakistan’s power sector had a total installed generation capacity of ~45,888 MW in FY24, showing a slight YoY increase of ~0.3%. However, actual power generation declined by ~0.6% to ~15,662 MW, with the average capacity factor dropping to ~34.1%, indicating lower demand due to macroeconomic issue. Public sector plants contributed ~61.4% of total generation, while private sector share dropped to ~38.6%. CPPA-G remained the primary offtaker, accounting for ~93% of total power generated, with K-Electric contributing ~7%. Renewable energy capacity grew by ~5.7% YoY to ~2,767 MW, including ~1,838 MW from 36 wind projects and ~680 MW from 7 solar projects.

The Company net generated energy at 52.12GWH in 1HFY25 (1HFY24:59.47 GWH, FY24:103.971GWh, FY23:132.315GWh). The benchmark capacity for the MGEL is 169.004GWh. the lower output in 1HFY25 is primarily due to reduced wind speeds, which averaged 6.01 m/s during the period—down from 7.68 m/s in the same period last year—directly impacting electricity generation.

The required availability and the capacity factor are 97% and 38.48% by NEPRA. However, due to lower wind speed the efficiency remained low, resulting in lower revenue generation.

Master Green Energy Limited (MGEL) has structured its project financing with a total cost of USD 65.03 million, comprising 80% debt (USD 52 million) and 20% equity (USD 13 million). The debt component includes a foreign loan of USD 25 million at a rate of 3M SOFR+ 4.25% with a 13-year maturity, and a local loan of PKR 4.38 billion, financed under two tranches: one at the SBP refinancing rate of 3% + 2.25% with a 10 year maturity, and the other at a commercial bank rate of 3M KIBOR + 2.25%, with a 13-year maturity. Both foreign and local loans are structured for repayment through quarterly installments. This financing mix reflects a balanced approach, leveraging both international and domestic funding sources while aligning repayment terms with the project's long-term cash flow generation.

Master Green Energy Limited (MGEL) maintains a stable liquidity profile, supported by its low operational costs, as wind IPPs do not require fuel procurement and primarily depend on internal cash flows. However, the lower wind speed resulting in lower generation continues to impact liquidity. The receivables from CPPA-G stood at PKR 347.22mln in 1HFY25, improving from PKR 491.88mln in 1HFY24 (FY24: PKR 667.70 million, FY23: PKR 759.08mln in FY23. This downward trend indicates gradual improvement in payment timelines.

Renewable IPPs do not have to pay for fuel which minimizes its working capital needs. MGEL's Net Working Capital Days stood at 57 days for 1HFY25 (FY24: 86days, FY23:37 days) which is a function of its receivable’s days. The Company has procured a working capital lines of PKR 300mln out of PKR 100mln were utilized as of March 2025 to support the operational need.

Free Cash Flow from Operations (FCFO) for 1HFY25 stood at ~PKR 553mln (FY24: PKR 1,904mln FY23: PKR 1,968mln) The decline in free cash flow from operations (FCFO) in 1HFY25 is primarily due to a substantial drop in profit before tax, which stood at just PKR 26 million, compared to PKR 575 million in FY24. Interest coverage ratio (FCFO/Finance Cost) as at 1HFY25 clocked at 1.5x (FY24: 2.3x, FY23: 2.5x) The decline in the interest coverage ratio in 1HFY25 is primarily attributable to lower free cash flow from operations (FCFO) during the period.

MGEL's leveraging at end Dec 24 stood at 72.2% (FY24: 73.4%, FY23: 79%). The company has been paying its principal and interest instalments as per their agreement with the financing authority.