Engro Powergen Qadirpur Limited (PSX: EPQL) recently announced its financial results for the third quarter of the calendar year 2024 (3QCY24), showcasing stable performance and earnings growth for the first nine months of CY24 (9MCY24).

In 3QCY24, EPQL’s sales remained flat, while the cost of sales increased by 2 percent year-on-year. The company’s gross profit for the quarter declined by 4 percent year-on-year.

Administrative expenses rose sharply during this period, showing a 48 percent year-on-year increase, which impacted earnings. As a result, operating profits for 3QCY24 fell by 7 percent year-on-year. However, finance income increased, supported by higher penal income and lower finance costs, leading to a 4 percent year-on-year growth in earnings during the third quarter of 2024.

For the 9MCY24 period, despite a 5 percent year-on-year decline in sales revenue, EPQL’s earnings rose by 18 percent year-on-year. Both gross and net margins improved during this period. The company announced a dividend of PKR 2.50 per share for 3QCY24, bringing the total payout for 9MCY24 to PKR 6.00 per share.

EPQL operates a 217 MW combined-cycle power plant near Qadirpur, fueled by low BTU permeate gas from Qadirpur gas field. Due to gas depletion, the plant entered the Gas Insufficiency Phase in 2018. To mitigate fuel shortages, the company has been operating on High-Speed Diesel (HSD) and is actively seeking local gas supply sources. Recently, EPQL has been negotiating to purchase low BTU gas from PPL’s Kandhot field.

As part of broader power sector reforms in Pakistan, a task force has identified 18 Independent Power Producers (IPPs), including EPQL, to discuss transitioning to a ‘take and pay’ model. According to a research note by Optimus Capital Management, this shift could have a significant impact on EPQL’s financial performance by linking payments directly to electricity consumption, potentially affecting earnings and dividend distribution.

EPQL is primarily owned by Engro Corporation, which holds a 68.89 percent stake through Engro Energy Limited. Recently, the Competition Commission of Pakistan (CCP) approved the acquisition of this majority stake by a consortium that includes Liberty Power, Soorty Enterprises, and Procon Engineering, with Engro Energy selling its entire stake in EPQL.