ENGRO: Expanding Energy Footprints through RLNG
​In line with ENGRO's diversification strategy to realign towards relatively higher yielding energy vertical, the company through its subsidiary Kolachi Portgen (Pvt) Ltd - KPL (100% stake) has recently filed a tariff petition with NEPRA for approval of US$392.3mn, 450MW (441.77MW net capacity) RLNG based Power Plant at Port Qasim, Karachi. Assumed to commence commercial operations by the end of CY19 (27 months construction period from financial close), the project is expected to deliver IRR of 23.5% by transmitting 100% net capacity to KEL under a power purchase agreement (Letter of inter-LOI issued by KEL) at an expected levelized tariff (at base case - RLNG without compressor) of PkR7.09/KwH for a period of 30yrs at 92% load factor (tariff application). While we have not incorporated the project in our estimates on awaited tariff approval, our preliminary workings based on the tariff petition filed is expected to add an estimated PkR2.69bn (PkR5.15/sh) to ENGRO's bottom-line from CY20, contributing an additional PkR25.5/sh to our SOTP based Dec'17 TP of 374.2/sh.
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