Why Liberty Power backed out of buying out Engro’s energy business

Just one day before a landmark acquisition was set to close, Liberty Power Holdings Ltd abruptly pulled out of its agreement to acquire a controlling stake in Engro Powergen Qadirpur Ltd (EPQL), citing a "material breach" by Engro Energy Ltd (EEL). The deal's unraveling sent shockwaves through Pakistan’s energy and financial sectors, with many observers calling Liberty’s move a case of buyer’s remorse dressed up in legalese.

The decision, made public on April 3, blindsided market watchers. Liberty declined to disclose the nature of the alleged breach at the time. Only days later, on April 7, did Engro break its silence — and what it revealed raised more questions about Liberty’s motives than Engro’s actions.

According to a detailed disclosure filed with the Pakistan Stock Exchange (PSX), Liberty’s claim of breach hinged on Engro Powergen Qadirpur’s participation in the government-mandated renegotiation of Power Purchase Agreements (PPAs) — a national effort to overhaul the terms of contracts between Independent Power Producers (IPPs) and the government to reduce energy costs and stem ballooning circular debt.