ENGRO will get 60 MMCFD gas from Gudu power plant

ECC approve the diversion of 60 MMCFD gas to ENGRO

ECC approves 60mmcfd gas allocation to Engro (KSE notice,)

§        In its meeting held yesterday, ECC approved 1) allocation of entire 60mmcfd of gas currently unutilized by Guddu Power to Engro from today (24hours starting yesterday) to ensure production of 50k tons of urea per month and 2) ECC also approve issuance of 300k tons import tender for urea to meet the supply shortfall for the summer crops.

§        As per the notice given by Engro Corp in KSE today, the supply of gas will start flowing in their system after meeting certain procedural requirements/plant start-up requirements. This gas will be made available till Guddu Power’s new 747MW power plant starts consuming gas.

§        From the given gas, Engro can start urea production from both of its plants at 80-85% of the capacity compared to current situation where Engro is operating only its new plant (1.3mpta capacity) close to its full capacity while the old plant (0.97mpta capacity) remained shut.

§        Our crude sensitivity analysis suggests earnings impact of PRs0.88/sh for Engro Corp from 1-month of additional 50k tons of urea production from the given gas. Assuming if the gas supplies will remain available for the rest of CY2013, it can add ~PRs4.85/sh to Engro Corp consolidated earnings.