AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
KARACHI: Lalpir Power Ltd (LPL), a prominent player in the energy sector operating a 362MW RFO-fired steam turbine, held its analyst briefing to discuss the financial results for CY24 and future outlook. The briefing unveiled a significant decline in net profits and outlined the company’s strategic directions following the early termination of its Power Purchase Agreement (PPA).
LPL, in collaboration with other Independent Power Producers (IPPs), has entered into an early termination agreement for its PPA, effective October 2024. This move comes under the 1994 Power Policy framework. As part of the settlement, the company has received all outstanding receivables up to September 2024, covering both CPP and EPP payments, but opted to write off the interest on Late Payment Surcharges (LPS).
The company’s financial performance for CY24 showed a sharp decline in net profit after tax (NPAT), which stood at PKR 464.8 million, representing a 90% decrease year-on-year compared to PKR 4.5 billion in the previous year. This decline was largely attributed to lower revenues and expenses linked to the termination of the plant’s PPA. Despite these challenges, LPL declared a cash payout of PKR 4.0 per share during the year.
As of March 2025, LPL has cash and short-term investments amounting to PKR 9.6 billion, primarily invested in mutual funds. Looking ahead, the company plans to continue power generation under the Competitive Trading Bilateral Contract Market (CTBCM) and intends to serve bulk power consumers via wheeling agreements with distribution companies.
In addition, the management is exploring new business opportunities, considering potential investments in the agriculture or textile sectors. The utilization of surplus revenue reserves for dividend payouts will be considered a last resort.
The briefing also addressed the future of the plant’s fuel source, with no current plans to convert it to coal-based operations. This decision aligns with authorities’ discouragement of new investments in imported coal-fired projects, compounded by transportation challenges for local coal to the plant’s site.
LPL reported elevated other expenses of PKR 1.4 billion during CY24, a substantial increase attributed to trade debts write-offs related to LPS, along with losses incurred on the sale of furnace oil on a Net Realizable Value (NRV) basis.
Despite these financial hurdles, the management highlighted that the estimated fair value of the company’s plant exceeds its net book value, which was recorded at PKR 14.8 billion as of March 2025.
The company’s stock is currently not under coverage by AKD Securities Limited.