LEPCL to start operations in mid of Feb

News Report

Lucky Electric Power Company (LEPCL) is set to commence operations on February 15-20. The Lucky management has informed during LUCK Corporate Briefing 2QFY22.

It informed that they had resolved all outstanding issues.

This will aid profitability significantly. Delay was on account of grid connection so the company does not anticipate getting any penalty for the same.

The management said that coal prices have gone up leading to a hike in overall costs. “Therefore, domestic offtake has become flat. Growth momentum has slowed down’ the management added.

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It further said that the company witnessed a seasonality impact in offtake due to winter.

Given high freight costs, exports are not feasible anymore, the company says.

They had launched Peugeot 2008 recently and hoped to see more excitement in this segment.

The lucky management informed during corporate briefing that Samsung assembly also began on December 21.

ICI’s profitability went up as the NutriCo Morinaga gain was recognized (51% holding).

Flat market share in North was witnessed but a slight drop in South as some players have increased presence.

North expansion size is PKR 27 billion.

Demand may stay flat for a few months before picking up again, Arif Habib Limited said while quoting views of the management.

The management also believes coal is also likely to come down in the next few weeks.

LUCK is consuming some Afghan coal at its North plant. Afghan coal is available in reasonable quantity and consumption was 10-12% of the total mix in Pezu (not being used in the South).

The company aims to use 50:50 Afghan and imported coal mix which the management believes it will achieve.

Average coal for the first half was USD 125-130/ton (CNF) while 2Q average was USD 125/ton. Coal by end of Dec’21 was USD 150/ton, which is also the current average (the company normally carries inventory for 3 months).

Freight is still around USD 25/ton.

The current retention price is PKR 8,800-9,200/ton in the South and PKR 8,700/ton in the North.

The company would need to increase prices by another PKR 200-300/ton from Dec’21 level in order to pass on the impact of high coal and other costs. However, flat demand makes the case weak so prices may stay unchanged.

The company used 20-30% gas in the last quarter in Pezu when supply was restored. However, once the winter season began, it was once again cut off. Going forward, a 50-50 ratio of gas and FO can be assumed at Pezu.

The gas utility curtailed gas supply also at the Nooriabad plant due to shortage in the country but LUCK had some clinker stock and dual-fired backup generators to cushion the margins.

Lucky Motor Corporation is producing some parts for local consumption of cars but localization of parts is low currently and the company will work on improving that.

Local coal supply to the new 660MW plant is not a challenge. The company will use a mix of local and imported coal and will continue the same for the next 6-9 months. Post that will shift to local coal only.