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Engro Powergen Qadirpur Limited (EPQL) is shifting to alternative fuels, aligning with the government’s policy to transition toward a sustainable energy future for Pakistan, reports WealthPK.

This shift has been necessitated by the decline in production at the Qadirpur gas field. In response to the declining production from the Qadirpur gas field, EPQL is actively working with regulators and stakeholders to finalise an alternative fuel option for its plant. The company has already secured a gas supply of 8-13 million cubic feet per day (mmscfd) from the Badar gas field, operated by Petroleum Exploration Limited (PEL), and received Nepra's approval for modifications to its Generation Licence. Furthermore, testing of the gas supply system has been completed to ensure operational readiness.

In August 2024, EPQL signed a Gas Sale and Purchase Agreement with PEL and now focuses on obtaining remaining regulatory approvals and updating key agreements. Additionally, the company is exploring other local fuel options. Despite a potential decline in power demand due to economic factors and higher tariffs, EPQL expects continued reasonable dispatch from the power purchaser due to its ability to generate electricity more cheaply than its competitors and its high ranking on the economic dispatch merit order. In response to declining gas supplies, Engro Powergen is also embracing a strategic transition to alternative energy solutions.

The company is prioritising renewable energy integration, including solar and wind power, to diversify its energy portfolio and reduce reliance on fossil fuels. Additionally, it is also exploring biomass and waste-to-energy technologies, offering both reliable energy sources and enhanced urban waste management. The company is advocating for policies that incentivise renewable energy adoption, such as tax benefits and streamlined project approvals. By collaborating with government agencies, Engro aims to align its initiatives with national energy goals and address potential regulatory challenges.

Additionally, it plans to launch public awareness campaigns to educate stakeholders on the benefits of alternative fuels, building broader support for energy diversification efforts. Moreover, Engro Powergen's transition to alternative fuels offers significant economic benefits alongside enhanced energy security. Investments in renewable energy and advanced technologies are expected to generate jobs in sectors like engineering, construction, and maintenance. Therefore, by sourcing materials and services locally, the company will contribute to regional economic growth, supporting businesses and communities. 

During the exploration process, Engro Powergen will face several challenges in implementing its alternative fuel initiatives. The company will need significant investments to develop infrastructure, including upgrading existing facilities and constructing new ones to support diverse fuel sources. Furthermore, advancing alternative fuel technologies will require ongoing research and development, supported by collaborations with academic and technological partners to drive innovation.

By actively engaging with regulators and key stakeholders, the company seeks to develop innovative and practical solutions to mitigate the challenges posed by diminishing gas reserves, reinforcing its commitment to maintaining energy reliability and supporting the nation’s energy needs. During the first nine months of the calendar year 2024 (9MCY24), the company reported a sales revenue of Rs10.4 billion, down from Rs10.9 billion in the same period of CY23, primarily due to lower dispatches.

The company’s gross profit inched lower to Rs2.4 billion from Rs2.5 billion. However, the company reported a higher net profit of Rs2.8 billion for 9MCY24, up from Rs2.4 billion in 9MCY23, driven by increased net finance income and better recoveries from the government. As a result, the earnings per share rose to Rs8.88, compared to Rs7.54 in the previous year. The company also announced a second interim dividend of Rs2.50 per share, in addition to an earlier interim dividend of Rs3.50 per share.

Credit: INP-WealthPk