Sale of thermal assets: Engro Energy Limited enters into definitive agreements

Engro Energy Limited (EEL), a wholly owned subsidiary of Engro Corporation Limited, has entered into definitive agreements with a consortium for the sale of its stake in thermal assets worth Rs34.75 billion.

Engro Corporation announced the development in its notice to the Pakistan Stock Exchange (PSX) on Thursday.

“We are pleased to inform that Engro Energy Limited (EEL), a wholly owned subsidiary of Engro Corporation Limited, has entered into definitive agreements with Liberty Power Holding (Pvt.) Limited (wholly owned subsidiary of Liberty Mills Limited) and other parties acting in concert for the sale of its entire: (a) 68.9% shareholding in Engro Powergen Qadirpur Limited (EPQL), (b) 50.1% shareholding in Engro Powergen Thar (Private) Limited (EPTL), and (c) 11.9% shareholding in Sindh Engro Coal Mining Company Limited (SECMC),” read the notice.

Engro shared that the transaction value of each of EEL’s shareholdings is: (1) EPQL: Rs7.5 billion (2) EPTL: Rs21.04 billion and (3) SECMC: Rs6.21 billion.

The notice stated that the amount is subject to certain adjustments as agreed in the definitive agreements.

“Completion of the transaction is subject to conditions as agreed in the definitive agreements, including receipt of corporate / regulatory approvals and lender consents,” it added.

In a press release issued separately to the media, it added that the consortium is made up of Liberty Mills Limited, Soorty Enterprises and Procon Engineering through Master Group of Industries.

“The sale of thermal assets is part of Engro’s ongoing efforts to streamline and optimize capital and resource allocation,” the statement added.

Ghias Khan, President & CEO of Engro Corporation, said it is important that “we constantly reevaluate our business portfolio and optimise it to ensure that we remain focused on helping solve the most pressing issues of our time.

“The Share-Purchase Agreement with Liberty opens exciting opportunities for growth, innovation, and continued success for both our people and businesses,” he was quoted as saying in the statement.

Meanwhile, Muhammad Ashraf Mukaty, Chairman Liberty Group and President Liberty Power Holding, said the vision is to expand beyond the current purpose and allocate strategic resources for growth.

“As one of the founding shareholders in EPTL, we have been part of the Thar Dream since its inception. Our vision is to expand beyond the current purpose and allocate strategic resources for the continued growth of the businesses, our people, communities, and Pakistan,” he was quoted as saying.

Back in February, a consortium comprising of textile companies had expressed its “firm intention” to acquire a majority stake i.e. 68.89% of Engro Powergen Qadirpur Limited (EPQL), a subsidiary of Engro Energy Limited.

As per Engro’s latest financial results, the company’s revenue grew by 35% to Rs482 billion in 2023, while consolidated Profit After Tax (PAT) before accounting impact due to re-measurement of thermal energy assets increased to Rs66 billion versus Rs46 billion last year.

About Engro’s thermal assets

EPQL is an independent power plant (IPP) that operates a 217 MW permeate gas-based plant in Qadirpur, Ghotki.

The plant is a combined cycle plant, with 1+1+1 configuration including one gas turbine, one heat recovery system generator (HRSG), and one steam turbine.

Engro Powergen Thar Private Limited (EPTL) was formed in 2014 to set up a 2x330MW power project in Thar Block II, Sindh, Pakistan.

The company is a joint venture between Engro Powergen Ltd (EPL), China Machinery Engineering Corporation (CMEC), Habib Bank Ltd (HBL), and Liberty Mills Limited. The project successfully achieved commercial operations date on July 10, 2019.

Meanwhile, Sindh Engro Coal Mining Company (SECMC) is Pakistan’s leading coal producer operating the country’s first open-pit lignite mine in Block II of Tharparkar area in Sindh province of Pakistan. With a current annual mining capacity of 7.6 million tons, it provides lignite quality coal to power producers in Pakistan.