Power project: Lucky alters investment plan

660MW LEPCL will now be subsidiary of Lucky Cement.

KARACHI: Lucky Cement – the country’s largest cement maker with over 18% market share – has announced a change in the planned structure of its investment in a 660MW coal-based plant, according to a company notice issued to the Karachi Stock Exchange (KSE).

The board of directors (BoD) of the company has now decided that Lucky Electric Power Company Limited (LEPCL) will be a wholly-owned subsidiary of Lucky Cement instead of Lucky Holdings Limited (LHL).

Initially, the Group planned to set up the coal power plant as a wholly owned subsidiary by the name ‘Lucky Electric Power Company Limited (LEPCL)’ under the 75% owned subsidiary Lucky Holdings Limited (LHL), which would have effectively resulted in a 75% stake of Lucky Cement.

While the debt/equity ratio will remain the same at 75:25, the incorporation of LEPCL as a wholly owned subsidiary of Lucky Cement will increase its equity investment from the earlier $202 million to $270 million (Rs27 billion).

The estimated cost of the power project will be around $1.08 billion, said the notice.

The drawdown of the equity proportion will most likely be spread across three years as per the determination of tariff by National Electric Power Regulatory Authority (Nepra), AKD Research commented.

“We expect that Lucky Cement will be able to meet the equity portion of its investments through its own resources as we expect the company to generate cash flow from operations of Rs47 billion across the next three three years,” the report added.

Published in The Express Tribune, September 17^th, 2014.

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