EPCL eyes long-term energy strategy amid gas levy uncertainty

November 2, 2025 (MLN): Engro Polymer & Chemicals Limited (PSX:EPCL) is actively evaluating multiple energy options, including solar, coal, grid and hybrid systems, and expects to finalize a comprehensive energy strategy by the end of December 2025 or early January 2026. 

EPCL in its corporate briefing session mentioned that uncertainty surrounding the gas levy remains a key challenge, as the levy is being charged monthly with delays and at fluctuating rates, making financial planning difficult.

 Despite this, management stated that operations remain viable as long as the actual levy stays below the notified level of RS 791/MMBtu, though provisions continue to be maintained at this higher rate as a prudent measure until a final notification is received. 

During the latest period, EPCL reported a loss after tax of Rs3.45bn, translating into a loss per share of Rs3.8. This came despite revenue growing to approximately Rs 57.6 bn supported by an improvement in gross profit. 

Operationally, EPCL achieved its highest-ever nine-month sales, driven primarily by strong domestic demand for PVC, where the company maintained an approximately 85%market share. 

PVC sales volumes reached 173,000 tons in 9MCY25, up 19% year-on-year. Softening ethylene prices also offered some relief, with costs declining to an average of $825 per ton.

However, global PVC prices remained range-bound. Caustic soda performance stayed stable in terms of demand and pricing, though margins remained under pressure due to high gas and energy costs and regional oversupply from China.

The Hydrogen Peroxide (HPO) segment continued to gain traction locally, supported by increasing market share, even as low-cost imports from Bangladesh benefiting from subsidized gas kept pricing competitive. 

Management reiterated that VCM production is highly energy-intensive, which is why decisions around energy sourcing are being taken with caution. 

EPCL aims to ensure cost competitiveness and supply security for the next 10 to 15 years. 

While near-term profitability is expected to remain under pressure due to gas levy uncertainty and rising energy costs, the company expects margins to gradually recover as ethylene prices remain soft, PVC demand stays strong, and clarity emerges on its long-term energy plan.

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