Engro Powergen Qadirpur Limited (EPQL) is expected to report a 43% year-on-year decline in profit for the third quarter of calendar year 2026, as higher fuel costs weigh on margins despite a substantial increase in electricity generation.
The company’s profit after tax is projected at Rs225 million for the July-September quarter, compared with Rs391 million in the same period last year, according to an analyst report dated October 15, 2026.
The earnings pressure is primarily linked to EPQL’s growing reliance on relatively expensive gas supplied by Pakistan Energy Limited (PEL). Higher fuel expenses are expected to offset revenue growth and reduce the company’s profitability.
Higher Fuel Costs Expected to Squeeze Margins
EPQL’s gross profit is projected to decline 35% year-on-year to Rs304 million in the third quarter as the cost of fuel rises.
Revenue, meanwhile, is expected to increase 31% to Rs4.45 billion from Rs3.39 billion a year earlier. However, the cost of sales is forecast to rise by 42%, outpacing revenue growth and putting pressure on gross margins.
The projected results highlight the challenge facing the power producer: higher electricity generation can increase revenue, but earnings may remain under pressure when additional output depends on more expensive fuel.
Electricity Generation Expected to Increase
Despite the anticipated decline in profitability, EPQL’s electricity dispatch is estimated to rise 27% year-on-year to 265 gigawatt-hours (GWh) during the third quarter, compared with 208 GWh in the corresponding period last year.
Generation is also projected to increase 44% quarter-on-quarter.
Improved gas availability and increased demand from industrial consumers shifting from captive power generation to the national grid are expected to support higher output.
However, the improvement in dispatch may not translate into stronger earnings unless the company can control its fuel costs and improve the economics of electricity generation.
Declining Qadirpur Gas Reserves Increase Fuel Challenges
Declining reserves at the Qadirpur gas field have prompted EPQL to secure between 8 million and 13 million standard cubic feet per day (MMscfd) of low-BTU gas from PEL’s Badar field.
While the additional supply supports plant operations, its higher cost has weakened the plant’s position in the electricity merit order.
EPQL has moved to 18th place in the latest merit order list, compared with ninth place when it operated on permeate gas. A lower ranking could limit its dispatch opportunities relative to more competitive power plants.
The change illustrates how fuel availability and pricing can influence both plant utilisation and financial performance in Pakistan’s power sector.
EPQL Explores Alternative Gas Supply Sources
To reduce its dependence on relatively expensive fuel, the company is exploring additional gas supplies from Kandhkot through the PPL corridor, along with further volumes from the Badar and Salam fields.
Securing more competitive gas could improve the plant’s operating position and support stronger dispatch levels.
The availability, pricing and delivery of these alternative supplies will be important factors in determining whether EPQL can reduce its cost pressures and improve earnings in subsequent quarters.
Higher Load Factor Could Support Future Earnings
If the company secures sufficient gas at competitive prices and increases its load factor to between 80% and 85%, earnings and cash flows could improve.
A higher load factor would allow the plant to operate at greater utilisation, provided fuel economics and dispatch conditions support sustained generation.
For now, EPQL’s near-term outlook remains closely tied to its ability to secure affordable gas supplies. Although electricity generation is expected to increase, elevated fuel costs and a weaker merit order position remain key constraints on profitability.