KARACHI: The Lucky Cement Limited declared on Tuesday that the company board had approved equity investment of around Rs27 billion to set up a 660MW coal-based power project in Karachi.

“The project will be set up and owned 100pc by the company and equity investment will be made into ‘Lucky Electric Power Company Limited’ (LEPCL),” the directors said. It represented departure from the previous plan of setting up the project through Lucky Holdings Limited, a subsidiary three-quarters owned by the company. Lucky Cement further stated that the power project would be set up with an estimated project cost of $1.08bn and financed in the debt/equity ratio of 75:25.

“The company will be the exclusive sponsor of LEPCL investing an amount of Rs27bn for the project and holding 100pc equity stake in LEPCL, through a 100pc owned subsidiary,” the company reiterated and noted that the implementation of the power project was subject to all necessary regulatory approvals and required consents. The plan to invest $200m in setting up the 660MW coal-based power project in Karachi was first disclosed by the company back on July 16.

The announcement had then come soon after the Nishat Group expressed intentions to set up two 660MW coal power projects in Punjab.

Experts say that to optimise power generation facilities at their plants and keeping in view future opportunities in domestic and export markets, the cement industry has embarked upon ambitious plans to construct Captive Power Plants (CPPs) that are based on coal. Most mills have already switched over to coal as the basic fuel. “Currently, bigger portion of the cement industry’s coal requirement is met through imports from Indonesia and South Africa”, asserted a market watcher.

The news of Lucky deciding to fully own the new coal-based power project was received well by the investors at the stock market on Tuesday where the Lucky stock gained Rs14.54 to close at Rs402.67.

Published in Dawn, September 17th, 2014