Commissioning of LOTPTA’s electricity generation plant to ease-off power outages in Karachi- Alfalah Securities Limited

Karachi: Lotte Pakistan (LOTPTA), at present the largest consumer of KESC, has made efforts to get rid of its dependency on purchased electricity by working on a power generation plant which would be commissioned by the end of 1HCY12.

According to Alfalah Securities Limited, the commissioning of a captive power generation plant would enable Lotte to minimize the risks of power supply outages as it would get uninterrupted electricity supply and would also enable KESC to divert 35-40MW of electricity to the citizens of Karachi thus easing off the burden of heavy load-shedding in the city.

The company had made an investment of USD 50 million on the construction of a captive power generation plant, capable of producing 40MW of electricity, which would help it to make significant savings in the production cost. LOTPTA trades at an attractive CY11 P/E multiple of 3.2x hence Alfalah Securities Limited recommends a Buy on the stock however, the company is subjected to seasonal fluctuations in its PTA business.