Engro Powergen Qadirpur Limited ($EPQL)

Welcome. To everyone who has joined us just now, welcome to the annual analyst briefing for Engro Powergen Qadirpur. So we'll quickly skim through this slide. This deck is obviously uploaded on the PSX portal or [Foreign Language]. I just want to summarize a few quick things, and then we can move on to the Q&A. So in the agenda, the first item is a quick snapshot of the sector updates and the macro update. In terms of macro, I think these numbers are more or less familiar with all of us, but [indiscernible]. In terms of power sector update, we've just reproduced some numbers here that were available. Installed capacity, [indiscernible] for fiscal year 2025 has reduced since last year's fiscal year number, and that is mainly because of the IPP contract terminations that took place in this time period. Power demand you have will [indiscernible] as of December 2025 the current year was to compare current year of September 2024. So from June to December, mainly in the second half of 2025, there was increase in the power demand bank, not a lot, but a small increase. And that is attributable to mainly to the industrial sector because of the different levies that have been implemented on captive power or [indiscernible] in the second half of 2025, that has contributed to this marginal increase in the power demand number. Circular debt, obviously, we all know, there has been a lot of work done here by the government in line with the IMF requirements. So circular debt as of the -- reported as of fiscal year 2025 was PKR 1.6 trillion, which was lower than the number which -- of same period last year, which was PKR 2.4 trillion. Moving on. This is a time line of the key developments that took place in 2025 for Engro Powergen Qadirpur in the previous briefings discussed [indiscernible]. I'm just going to highlight a few numbers that are important for us as of the year-end. Obviously, amendment agreement signed in February 2025, which moved the business model for EPQL, from Take or Pay to Hybrid Take & Pay. And then we -- as a result of that, our receivables were clear to a bullet payment of PKR 7.4 billion. Then in the second half of 2025, how many apply additional gas alternate fuel, just get the approvals you have about 2024, say, [Foreign Language], we got those approvals. And currently, we're using the PEL gas to produce power also. In terms of collections, our collections for 2025 were 89%. This is other than the bullet payment that was received in March last year. So this is the collection other than the bullet payment. Dividend payout, [Foreign Language] as a result of this bullet payment was higher in the year, and we managed to pay out PKR 11.75 per share for the year 2025. CSR initiatives continued as per plan, and there were some achievements that we highlighted here that the company received in terms of corporate governance. Just the awards we received from SAFA award and then we also received an award from ICAP and ICMAP and then in the end, we also got an award from -- it's not an award. It's just a highlight of achievements, basically displaying minted we were very high in the rating of what EPQL in terms of HSE standards. So those are some of the highlights for 2025. I'll move on to the numbers now. [indiscernible] revenue to have for the year was PKR 11.9 million, almost lower than same period last year, obviously, because of the move, mainly because of the move to Hybrid Take & Pay and also because of our load factor we had as our purchase [indiscernible] compared to [indiscernible]. We had a scheduled outage [indiscernible] inspection gate, which went on for around 20 to 22 days. Just given us, were not able to produce, generate electricity during that time period. Earnings per share correspondingly have gone down. The EPS for 2025 was around PKR 2.6 per share as compared to PKR 6.6 per share per same period last year. In terms of profit after tax, the tax for the year 2025 was PKR 836 million, lower than almost PKR 2 billion for last year, the mainly attributable again to Hybrid Take & Pay model and the lower load factor in 2025. We approach to operational highlights. We were able to maintain an availability of 100%. The net electrical output was 774 gigawatt hours. And in terms of the load factor that translates into 42%. Receivables have significantly declined in 2025, which is good for the company, obviously, and that is mainly because of the bullet payment that we received in Q1 of 2025 as a result of moving to Hybrid Take & Pay model. Our [indiscernible] year-end page, our receivable head, [indiscernible] overdue of 1.5 billion here, whereas the rest is due invoiced but not yet due for CPPA-G to be bid. Last slide, may I just want to highlight a few business risks for the company. Obviously, the first to pertain to gas deflation, [indiscernible] with the addition of PEL gas guess, this has been slightly reduced in terms of rate intensity and probability. But the risk carries on, and we have to look for alternate fuel gas options to ensure [indiscernible] operations and impact now in the coming years. So I'm going to get to hear that it's much better for 2025 with all the interventions that the government has done and clear the circular debt. But with the new geopolitical situation that has arisen, circular debt will continue to be a risk for power companies for the economy, and we will continue to ensure [indiscernible] collections here [Foreign Language]. [indiscernible] foreign country exchange and economic liquidity risk, same for the geopolitical M&A but how the current currency is going to move, how the interest rates are going to move. So this is a risk that the business will continue looking out for and ensuring mitigation against anything that comes up. Revelation policy consistencies, this is the macroeconomic policies. It's methane, which directly impacts the power industry. So that is something that EPQL has always -- needs to be cognizant of and plan against. In terms of merit order, even though currently, with the imported fuels being very expensive, EPQL does not see any risk maybe not getting dispatch, but it's part of the indigenous fuel so we're getting a regular dispatch on this. But this risk continues because of the [indiscernible] design in the fuel cost imported fuels in the future, this can always impact EPQL also. Operational disruption income are generically [indiscernible] outage for [indiscernible], which is not planned for sudden operational issue out to obviously, operations in fact, [indiscernible] directly impacted [indiscernible] revenue play because now we are on Hybrid Take & Pay order. So this risk has also been highlighted for everyone's attention. Lastly, the most important topic that everyone wants to understand and hear about is the alternate fuel. The company is actively pursuing additional fuel options. It's still related on the annual report, we will multiple times EPQL can multiple fuel options become the [indiscernible] as a company, as a management [indiscernible] Hybrid Take & Pay model to [indiscernible], so we need to maximize our load factor and maximize our return on equity. So then the financial position of the company continues in the favorable election. Two options that we have listed our front forecast under the PPL corridor, but there ends along as is with PEL. This gives out a more idea of -- became too indifferent gas, wells and additional gas giving negotiations. So these 3 are our major plans. And if everything goes well, if you get this gas, then as we have mentioned in the annual report and in the directors' report, we can increase this company's load factor from current 42% to 45% of our particular financials may. With PEL addition, it can move slightly higher. And with adding addition of all these gas, we are hoping that we'll go somewhere around 70% to 80% in [indiscernible]. So that's the update from our side, we are open to questions, and I'll just turn -- I disclose the slides for now so that we can take questions from you all. Please feel free to give us the question, write a question in the chat or you can raise your hand and we'll unmute.

This is Saad Ali from Lucky Investments. And my question is around the gas supply -- potential gas supply from Kandhkot. I understand you just spoke about it, but can you give us some idea of what -- at what stage of talks are you with PEL for availing that gas in the future? And what is the likely gas price going to be? Is it because the current gas price at Concorde gets is much lower than let's say, PP12 price or what third parties have been able to get elsewhere in Pakistan. So any guidance on what -- where the gas price could be, let's say, if you are able to reach an agreement with PPL for that gas supply?

Sure. So Adeel, are you online?

Yes.

So Adeel is our Chief Executive Officer, and I'll let him.

[indiscernible] take over. So just to respond to your question on Concorde gas. So Concorde gas, we actively engaged with all the stakeholders. [indiscernible] allocate to [indiscernible], obviously whatever gas that we could get or consume would be available on a basis for sale. [indiscernible] to all the stakeholders in the power and petroleum. Somebody make part, obviously, the 2 gas [ looking ] or to gas that was deliberately up for sale. And our efforts are elevated this case or it to power sector. Do you keep pricing here? Is the pricing exactly [indiscernible] where you price at [indiscernible] year from this year? So from a pricing point of view, it makes sense also. And we will be on high on paid order. Is the likelihood [indiscernible]? We are pretty hopeful and also because of the [indiscernible] issue, you give [indiscernible] here would get some time to normalize. So we're hoping the focus will be on indigenous fuel and diverting [indiscernible] gas to our sector. Pretty hopeful together with other news. Someday, this or something we [indiscernible] hopefully within this year, we should have some good deal on this.

Anyone else who wants to ask the question? Your question, [ Jack ], our team is going to respond separately on the chat. We have a question from -- can you please unmute?

Perfect. Perfect. I just had a couple of questions. I just briefly started doing research on the company. So just a question. Does company expect the pay -- the dollarized index paid to increase due to the recent geopolitical conflicts that are happening right now? Or is it going to keep it at the [ $537 ] rate at the moment? And then I can go and ask the other questions after you answer or perhaps I can ask all the questions first and then you can answer accordingly, whichever is easier for you.

Sure. Can you just repeat your first question?

Yes, sure. So since the company gets -- since the company gets charge [ $537 ] for the gas from the Butterfield. Does the company expect those prices to increase because of what's happening with -- in the Middle East right now?

Yes, yes. So with the Brent oil costs going up, there is a chance that PEL's gas price will increase. But correspondingly, on the merit order, we also expect to propel to hold this position more or less because along with that, all the imported fuels that are above or below it will also move simultaneously. So yes, the price might go up. Whether do we see a merit order falling or dispatch risk? Not at this point.

Okay. Okay. Perfect. My next question was -- so since the plant gets the mix of RLNG and gas from the Butterfield, I just wanted to understand what was the mix? Exactly how much does they consume on RLNG and what -- and how much is it consumed from the broader gas field?

So we don't have RLNG mix. We get Permian gas from depressed and we get gas from PEL's [indiscernible] at the moment. There are no RLNG in the mix.

Okay. First, perfect. Just correct that. And as of right now, I believe that yes, the company has a contract with the Badar gas. So exactly how long is that contract valid for?

Contract? With PEL gas?

Yes, with PEL gas.

Yes. That's for 3 years, but it can be renewed for another 3 years of the same contract. So current contract drilled down as 3 years, renewable for another 3 years.

Perfect. So the one that we are in right now, when is that going to expire?

It's going to end somewhere in 2028, if I'm not wrong.

2028. Okay. Perfect. And does the company have any planned shutdowns or maintenance in the short to medium term? I believe like a deep maintenance occurs every 6 years, if I'm not mistaken, but I just would like to confirm.

Yes. So the major maintenance plan that we had was already implemented in 2025. We might do some, what you say, generic maintenance that is required on an annual basis, but that will not be long, it will be, say, for 5 to 8 days max.

Okay. Perfect. And usually, that -- do you like a general maintenance they take like a week or 2? Is that usually how long --

Yes. Generally.

Sorry, I just had one more question. So you mentioned that you're looking at the Concorde field, the Butterfield and there was another one, I'm sorry, if I missed it over the presentation.

Yes. It's [indiscernible].

And what rates would you be receiving from those gas deals? And what would the contract tenure to be led from either gas yield?

So the negotiations are currently ongoing, but we, as management, are trying our best to keep the cost more and less similar to what we have on PEL right now. We don't want to have anything more expensive because that -- on the merit order, that will not generate enough dispatch. So not much value addition. So we are aiming to keep it around the same price as PEL, but we are too early in the process to confirm anything. I'm just sharing with you what our intent is.

[Foreign Language]

[Foreign Language] then we will be able to give better profitability and shareholder return in the coming years. [Foreign Language] receivables dish out continue in terms of dividends. That's because [Foreign Language]. So 70% of the business is covered, but 70% is beyond other devaluation. [Foreign Language]. So the [indiscernible] took almost 70% in other menu to [indiscernible] but in [indiscernible], 70% [Foreign Language] equity, so we recovered in that. I hope I've answered your question. It's on the chart the [Foreign Language], that's probably more detailed. So you can also refer to that. Any other questions?

Just one more question. So just my general understanding. So you touched on merit order, and I understand how important that is in terms of government demand. So what exactly would cause for the -- cause the companies order to go up or down in the list of the other IPPs that there are?

You are asking me how do I see the merit order going up or down in the future?

Yes. And like what would be like -- what would cause for that to either go up or down? Like some of the main drivers for that?

Sure. So the merit order is directly linked to the fuel cost. The price of gas that we are getting is directly coordinated to the ranking of merit order. So -- and obviously, in relation to other plants also. So if other plants were on imported fuels, if they become expensive, then my merit order will improve because I'm -- my guess it stays on the same price and considering that it's indigenous fuel resource, then my merit order should go up. If my gas price also increased in the same line as imported fuel cost, then there is no change in the merit order. So this is how the merit order works. It's directly dependent on the cost of fuels that we are getting.

Okay. And where do you see the company's merit order being in the short to medium term?

So we hope to stay where we are or even get better. It really depends on how the imported fuel plants and when that's imported coal plants that are operating above us on the merit order to behave in the forthcoming future. If coal becomes expensive and the inventory that they have depletes, there is a chance that they might get more expensive and our merit order might increase. But it is yet to be seen what happens. As you know, we don't know if the war will end in the next week or it will end in the next 3 months or 6 months. Situation changes every day. So this is how the merit order can move.

[Foreign Language]?

[Foreign Language]. Obviously, [indiscernible] collection per percentage last year 100%, later it was 89%, as I just showed you. So towards a slide, 10% key collection here, [indiscernible] 90% we are able to collect. [Foreign Language]. So we should be able to do better in terms of collections. But having said that, [indiscernible], geopolitical situation generate and you know how the economic situation is currently under stress [Foreign Language]. So we are not sure how circular debt pans out how our government responds to IMF requirements, what happens, currency devaluation of [indiscernible]. Lots of factors are moving at the moment. [Foreign Language]. We have a special team in Islamabad who visits [indiscernible] CPPA-G office almost on a daily basis, [Foreign Language]. Any new questions, anyone?

[Foreign Language], if there is no possibility of such thing happening?

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language]. So -- as long as habitual gas field is processing and using this gas, [Foreign Language], we don't foresee [indiscernible] gas will change everything.

This is [indiscernible] from [indiscernible], regarding opening load factor explain you are exploring alternative fuels. Just say a load factor [indiscernible]. [Foreign Language].

[Foreign Language] It's right in the major of [Foreign Language]. So it's not extreme south. [Foreign Language] and then that was sorted [indiscernible] in the middle of the country here. So [indiscernible], we have not encountered that much of a problem in terms of evacuation. So mostly [indiscernible] stability is a [indiscernible] important out there. So from a transmission perspective, EPQL, the risk of dispatch is very much lower as compared to -- you can see other power plants may be in the lower state. The [indiscernible] transmission issue result okay, at least from the third part. But EPQL issued [Foreign Language], even when it was producing at higher load factors. Any other questions?

Is [indiscernible] current load factor [indiscernible] average of previous [indiscernible] the 31st March and [indiscernible] quarter.

More or less any [indiscernible]. [Foreign Language], but more or less same. Are there any questions?

[Foreign Language]. I just want to understand -- is it because of the merit order? [Foreign Language]

[Foreign Language] I think since 7 to 8 years has started depleting. So we have gradually come down to this level. [indiscernible] though has had purchased a 42% [Foreign Language]. Otherwise, we would have been able to more or less maintain the 45% factor. With PEL coming on, we are opening in 2026, we should be able to do better than 45%. [indiscernible], thank you so much for all of you joining and for all the questions. We will see you soon in [indiscernible] in the Q1 analyst briefing, which is probably 2 to 3 weeks later. Thank you so much. [indiscernible].