Karachi October 15 2023: Lucky Electric Power Company to start receciving cheaper coal from Pakistan's largest coal deposits at a rate which would be at 66 percent discount to current international prices from May 2024.
Lucky Electric Power Company Limited has established a coal-fired power plant with a capacity of 660MW, achieving Commercial Operation Date (COD) in March 2022. The plant is successfully connected to the grid and is currently supplying electricity.
The primary fuel source for this power plant is coal, and the company has signed a coal supply agreement with Sindh Engro Coal Mining Company (SECMC), which will begin supplying coal from Block-II (Phase III) in May 2024. Initially, the expected start date was May 2023. Additionally, the company has signed agreements with reputable coal suppliers for imported coal, and the plant currently utilizes a combination of local and imported coal for electricity generation.
The expansion of the plant in Phase II has led to a reduction in the coal price to approximately $46 per ton, making Thar Coal one of the most cost-effective sources of fuel. With an abundant reserve of 175 billion tons of coal deposits in Thar, this indigenous resource has the potential to ensure the country's energy self-sufficiency for many years to come.
In the fiscal year 2023, the company achieved a total revenue of approximately PKR 98.3 billion and a net profit of approximately PKR 9.4 billion. The company has switched its O&M contractor from KEPCO Plant Services & Engineering Co. Ltd (KPS) to M/s Harbin Electric International Co., Ltd. (HEI) of the People's Republic of China. The primary focus for the company moving forward is to ensure the continued operation of the plant.
To meet its financial needs, the company has secured short-term financing facilities totaling around PKR 18,249 million, with approximately 70% utilization as of June 2023. Furthermore, the company has outstanding debt instruments amounting to PKR 29 billion to support its operational requirements. The total short-term borrowings as of June 2023 amount to approximately PKR 39,689 million.
LEPCL is working to manage its financial requirements, taking into account the increased working capital needs due to the devaluation of PKR, supply chain challenges, and tariff adjustments. The company has an offtake agreement with CPPA-G, which ensures capacity payments from CPPA-G, even if no purchase order is placed, upon the plant's availability as per the contract. The Government of Pakistan has provided a payment guarantee for dues from CPPA-G.
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