Act2 Din Wind Private Limited (the "Company" or "Act2 Din Wind") is a Renewable Energy Independent Power Producer (RE IPP) established under the Renewable Energy Policy of 2006. The Company operates a 50 MW wind power plant located in Jhimpir, District Thatta, Sindh. Act2 Din Wind successfully achieved its Commercial Operations Date (COD) on February 27, 2022.

Act2 Din Wind has been granted a cost-plus tariff under NEPRA's 2019 tariff determination for wind IPPs. The Company is entitled to a generation tariff of PKR 7.2340 per kilowatt-hour (kWh) for the first 10 years and PKR 2.3790 per kWh for years 11 to 25. At the time of financial close, the project's levelized tariff was set at US¢ 4.7212 per kWh. The Company has submitted a request for the true-up of its tariff, which is currently under review by the authority. The indexation being provided is interim and subject to adjustments based on the authority's final decision. As of October-December 2024, the indexed tariff stands at PKR 13.8538 per kWh.

The IRR of the project, as agreed with NEPRA, is 14%.

Act2 Wind is owned by a consortium comprising Din Group (49%), Ismail Group (20%), Akhter Group (15.5%), and Tapal Group (15.5%).

The ownership structure of Act2 Din Wind demonstrates stability, supported by the strong presence of its sponsors in the energy sector. Initially, the Company was established by the Ismail Group, Akhter Group, and Tapal Group, each holding equal shares. However, in November 2021, Din Group acquired a 49% stake by purchasing 13.33% from the Ismail Group and 17.83% from the Akhter and Tapal Groups, respectively. This restructuring reflects the strategic alignment and commitment of the sponsors to the Company's long-term success. Given the consortium's significant experience and presence in the energy sector, the ownership structure is expected to remain stable in the medium to long term.

The sponsor groups of Act2 Din Wind are prominent, diversified conglomerates with strong business portfolios and a significant presence in the energy sector, particularly renewable energy. Din Group is a major player in the textile industry, contributing extensively to Pakistan’s export sector. Ismail Group, is one of the Country’s largest consumer goods companies, manufacturing products under brands like CandyLand, Bisconni, SnackCity, and Astro Films, and also holds a decent stake in The Bank of Khyber. Akhter Group is involved in technology and industrial manufacturing with a growing focus on sustainable energy. Tapal Group, consisting of Ameejee Valleejee & Sons, Tapal Enterprises, and Tapal Energy, has significant expertise in power generation, particularly through its 126 MW RFO-based power plant. Additionally, the sponsors, both individually or collectively, have interests in five wind power plants with a combined capacity of 250 MW, further demonstrating their strategic focus on renewable energy and their overall business acumen

The Company’s sponsors, with their strong financial muscle, have the capacity to support the entity both on an ongoing basis and during times of crisis.

The Company’s Board of Directors (BoD) consists of six members, including the CEO. DIN Group, being the major shareholder, has three representatives on the board, while Akhter Group, Ismail Group, and Tapal Group each have one director.

Mr. Mustafa Tapal is currently the Chairman of the BoD. The Chairman is nominated on a rotational basis from each group for a term of two years, starting from the first BoD meeting. However, the Chairman may continue in the role for a longer term with the consensus of the board members. Mr. Tapal has served as Chairman since the Company's inception. The other BoD include Mr. Fawad Jawed, Mr. Farhan Sheikh Mohammad, and Mr. Faraz Jawed, representing Din Group, while Mr. Khurshid Akhtar represents Akhter Group, and Mr. Asad Muhammad Iqbal represents Ismail Group. These members possess the requisite knowledge and experience, contributing valuable insights and expertise to the Company.

The BoD has extensive experience across various sectors, including finance, accounting, project management, construction, and manufacturing. The Company's board members engage in regular discussions, where key matters such as plant efficiency and the Company’s performance are thoroughly reviewed. They also provide guidance to the management in developing effective policies to drive the Company’s growth and success

The Company's external auditor, BDO Ebrahim & Co. ranked as “A” category auditor by ICAP, expressed an unqualified opinion on the company’s financial statements as at end-Jun24.

The Company has a flat organizational structure, primarily consisting of finance and technical staff, while the engineering, construction, and operations of the plant are outsourced. However, the reporting lines are clearly demarcated, ensuring efficient communication and accountability within the Company.

The CEO is elected by the BoD on a rotational basis from each group for a term of two years. However, the CEO's term may be extended by mutual consensus among the board members. Mr. Khurshid Akhter, is the CEO, who has been leading the Company since its inception, brings over two decades of diverse industry experience. He is supported by a skilled and experienced management team. Mr. Farhan Iqbal, serving as the CFO and Company Secretary, is assisted by a capable team that ensures the smooth financial and regulatory operations of the Company.

The management functions are clear and well-defined, ensuring the effective achievement of the Company's goals and objectives. The board members closely oversee the team to ensure successful execution. Additionally, the management holds regular meetings to discuss Company affairs.

The Company has progressively enhanced its IT solutions, enabling improved performance across various areas. The quality of its IT infrastructure and the range of activities it supports have shown steady improvement, effectively aiding in monitoring operations and management reporting.

Act2 Din Wind is being developed under the Renewable Energy Policy of 2006. The Energy Purchase Agreement (EPA) with CPPA-G spans a tenure of 25 years, commencing from the COD - February 27, 2022 According to the EPA, the Company is obligated to generate electricity in line with the benchmark generation while maintaining the required efficiency. Any decline in generation due to an efficiency drop will not be compensated by the power purchaser. However, in the event of curtailment in offtake by the power purchaser, the Company will be compensated for the missed volumes, termed Non-Project Missed Volumes (NPMV). These volumes will be calculated using previous generation trend and paid at the rate of applicable tariffs.

The Company has signed a long-term Operations & Maintenance (O&M) contract with Hydro China for the plant and Goldwind for the turbines. Hydro China, currently serving as the O&M contractor for several wind IPPs in Pakistan, including Act Wind 1, has a proven track record of providing satisfactory services. Both Hydro China and Goldwind bring extensive expertise in engineering, design, and the operations of renewable energy projects.

Resource variability risk is a unique challenge for Renewable Energy IPPs. For wind farms, this risk arises from their reliance on wind as a key resource, making them inherently exposed to wind risk. Under the Renewable Energy Policy 2006, wind risk is defined as the variability in wind speed, which directly affects the energy output of the wind IPP. According to the tariff structure, the Company fully absorbs the risk associated with wind variability. Consequently, the Company’s revenues and cash flows are influenced by seasonal variations in wind speed, which impact electricity generation and may result in fluctuations in cash flows.

The company has adequate insurance coverage for property damage and business interruption.

FY-2024, Pakistan's power generation declined by 1.9%, totaling 127,160 GWh. This marks the second consecutive year of reduced output, driven by elevated electricity costs, rising inflation, and lower economic activity. The Country's power generation remains heavily reliant on thermal and hydel sources, contributing approx. 45% and 31%, respectively, in FY24. The share of nuclear energy has notably increased to approx.19% in FY24, while renewable energy sources continue to constitute a modest 5% of the total generation. Recently, the Government of Pakistan (GoP) resumed negotiations with Independent Power Producers (IPPs) and established a special task force to implement structural reforms in the power sector. The ongoing process aims to lower generation costs and make electricity more affordable, although the outcomes of these negotiations are yet to be seen

During FY24, the net electrical output generated was 115,199 MWh (FY23: 138,669 MWh), compared to the benchmark generation of 166,440 MWh. The load factor for FY24 stood at 26.30% (FY23: 31.66%).

The capacity factor set by NEPRA is 38%. Act2 Din Wind’s efficiency factor for FY24 remained at 26.3% due to lower wind speeds. However, this efficiency level was sufficient to support the Company’s operations effectively, including debt servicing

The total project cost is USD 62.95mln, consisting of 80% of debt (USD 50.36ml) and 20% of equity (USD 12.59mln). The debt financing constitutes foreign loan of USD 25mln (3MLIBOR+4.25%) and local loan of PKR 4.5bln (SBP refinancing rate of 3%+2%). The local loan is eligible for refinancing under the State Bank of Pakistan (SBP) Financing Scheme for Renewable Energy. The foreign loan has a maturity of 13 years while the local loan has maturity of 10 years. Both the local and foreign loans are repayable in quarterly installments. The loan balance outstanding as of June 2024 is PKR 9,466mln

As of end-June 2024, the Company’s total receivables stood at PKR 591 million (FY23: PKR 790 million), with receivable days decreasing from 114 days in FY23 to 106 days in FY24. This reduction in receivable days reflects a slight improvement in the payment cycle, thereby enhancing the Company’s liquidity position.

Act2 Din Wind fulfills its working capital requirements through internally generated cash flows, without relying on short-term borrowing facilities. However, as a prudent measure, the Company has secured sufficient working capital lines that can be utilized if necessary.

The Company’s Free Cash Flow from Operations (FCFO) has increased, standing at PKR 1,231mln for FY24 (FY23: PKR 903mln), driven by a better Profit After Tax of PKR 694mln (FY23: PKR 438mln). The Company’s strong free cash flows ensure timely debt repayments. Additionally, the Company maintains a Debt Service Reserve Account (DSRA), which is backed by six months of Standby Letters of Credit (SBLCs), providing coverage for its financial obligations for six months until maturity.

The Company’s equity stands at PKR 3,447mln as of June 2024, with 13% of the project debt repaid. The current leverage ratio is 73.8%. The debt on the balance sheet primarily reflects project-related long-term loans, and the leveraging ratio is expected to decline gradually with timely debt repayments