KARACHI: Pakistan’s Liberty Power Holding, which this week signed a deal to buy the thermal energy assets of the country’s largest conglomerate for $125 million, is banking on its coal reserves and reforms laid out by the IMF for its investment to pay off.

Liberty Power entered into an agreement with a subsidiary of conglomerate Engro Corp to buy all its thermal assets, including Pakistan’s leading coal producer, Sindh Engro Coal Mining Company.

The deal is among the biggest in recent times in Pakistan’s power sector, which has remained in crisis for years due to unpaid debts and chronic technical issues.

“We believe Thar Coal is the energy future of Pakistan, it’s indigenous, it’s cheap and it’s base load,” said Zain Mukaty, Chief Operating Officer of Liberty Power, in an interview with Reuters on Friday, referring to coal deposits of the Thar desert.

The South Asian nation’s power sector has been plagued by high rates of power theft and distribution losses, resulting in accumulating debt across the production chain - a concern also raised by the International Monetary Fund (IMF).

The IMF’s policy suggestions under the current $3 billion standby credit arrangements with Pakistan have been a major confidence boosting measure for Liberty Power. Leading up to national elections held in February, Pakistan was governed by a caretaker government which amongst other measures, raised energy prices to stop the accumulation of circular debt, a form of public debt that builds up in the power sector due to subsidies and unpaid bills - a key reform required by the IMF. —Reuters