AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Lahore: Mughal Energy Ltd (GEMMEL) unveiled its forthcoming 36.5MW hybrid coal and biofuel power plant during an analyst briefing, indicating the project will be fully commissioned by the end of 2025. The initiative aims to enhance energy efficiency and cost-effectiveness through advanced European boiler and turbine technology.
The plant, as outlined, will initially operate using a mix of RB-1, local, and Afghan coal, while incorporating 30-35% biomass in its fuel configuration. Energy costs are projected at PkR21-22 per kilowatt-hour, with a capacity cost of PkR7 per kilowatt-hour. Despite not using local coal in the early stages, the company anticipates future cost reductions linked to commodity price declines and increased biofuel usage.
The power plant will feature a generation efficiency of 34.5%, with a connected grid capacity of 90MW. A significant portion of the electricity generated, approximately 32-33MW, will be used internally by Mughal Steel, potentially saving the parent company PkR300-350 million annually. This internal power generation accounts for about 30% of the parent company’s energy consumption.
Financing has been a focal point for Mughal Energy Ltd, which initially relied on its parent company due to liquidity challenges in the steel sector. The company is negotiating working capital arrangements with banks, estimating a requirement of around PkR1 billion to cover imported coal inventory for three months. Additionally, short-term Sukuk is under consideration to manage working capital needs.
Management reassured investors that banks have continued to support the company with credit lines, contrasting with the broader steel sector’s previous financial difficulties. The management remains optimistic about the future, noting that past liquidity issues are being resolved.
The briefing did not include any formal coverage of the company’s stock, according to AKD Securities Limited.