EPQL receivables at the end of CY24 stood at PkR9.5bn

Engro Powergen Qadirpur Ltd (EPQL) held its analyst briefing earlier today, where the management discussed the following:

Net sales stood at PkR13.2bn during the year, unchanged on a YoY basis. The bottom line, however, contracted by 15% YoY to PkR2.1bn (EPS: PkR6.61), majorly due to higher other expenses of PkR435mn (up 13x YoY) during the period.
The company’s total generation was recorded at 847GWh (load factor: 45%) during the year, compared to 870GWh (load factor: 46%) in CY23.
Notably, EPQL was part of the PPA amendments carried out by the authorities, transitioning to a take-and-pay model with effect from November ’24. Major changes include a minimum billable capacity factor of 35% (from 100% previously) in exchange for the waiver of overdue LPS owed by the power producer.
The fuel-sharing mechanism is expected to remain unchanged, as stipulated under the master agreement, which is 60:40 between the power purchaser and the company.
Regarding changes in the PPA, the petition has been filed with Nepra, and the relevant sections of the agreement will be updated following the regulatory hearing.
Management has provisioned the waiver of PkR1.7bn in LPS receivables from CPPA-G. On the other hand, the company also waived its LPS obligations owed to SNGPL.
Management expects to receive an outstanding balloon payment of PkR8.2bn of principal receivables between April and May’25.
The company’s receivables at the end of CY24 stood at PkR9.5bn (vs. PkR10.5bn in 4QCY23). Management stated that the receivables collection rate exceeded 100%, leading to the clearance of the backlog of overdue payments during the period.
A significant highlight during the year was the approval by NEPRA to modify EPQL’s generation license, allowing the option to utilize gas from the Badar Gas field (PEL) as an alternative low-BTU gas source. Awaiting regulatory approvals, the field is expected to provide a gas supply of 8-13 mmcfd at a cost of US$5.6/ MMBTU.
Company’s merit order ranking stood at 11 during the year; however, management anticipates a drop to 13 once Badar gas field generation comes online.
Energy cost component for Badar gas is estimated at PkR13/kwh, compared to PkR9/kwh for Qadirpur. Management does not foresee a significant impact on the load factor, and expects same level of dispatch next year.
Management views the agreement with PEL on Badar Gas Field as a positive development, ensuring a secure gas supply for at least three years, amid declining reserves from Qadirpur Gas Field. Gas supply from PEL is expected to contribute between 22MW-30MW in generation.
Moreover, management is evaluating alternate sources, including Kandhkot and other fields, especially since the third-party sale-agreement is now in place; however, these discussions are still in early stages.
Management views the decline in imported coal prices and the implementation of WACOG as potential risks to the company’s merit order position.
The scrip is not currently under our formal coverage.

Courtesy- AKD Research