Press Release

JCR-VIS Reaffirms Entity Ratings of Quaid-e-Azam Thermal Power (Pvt.) Ltd.

Karachi, April 06, 2017: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Quaid-e-Azam Thermal Power (Pvt.) Ltd (QATPL) at “AA/A-1+” (Double A / A-One plus). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on April 19, 2016.

The ratings assigned to QATPL takes into account its strong ownership profile with the company being wholly owned by Government of Punjab (GoPb). QATPL is in the process of setting up a 1,180 MW Re-liquefied Natural Gas (RLNG) based Combined Cycle Gas Turbine (CCGT) power plant at Bhikki, Punjab. The ratings draw comfort from the presence of a non-supply event in the Power Purchase Agreement (PPA) which insulates the project from the risk of gas non supply; the company shall continue to receive capacity payments during the non-supply period. In addition, the “Suspension” clause in the PPA entitles the Company to suspend its plant operations in case the receivable amount from Central Power Purchase Agency (Guarantee) Limited (CPPA) at any point of time remains outstanding for 60 days or more, while continue to receive capacity payments during the suspension period. This provision further insulates the company from circular debt risk.

The plant has achieved satisfactory progress to date. The testing of simple cycle unit was completed in February, 2017; GT-1 is already operational while power production from GT-2 is expected soon. The combined cycle operations are projected to be achieved by December, 2017. A project delay exceeding 180 days will generate negative cash flows for the company.

The project cost is estimated at USD 769.9m with a debt to equity ratio of 75:25. Equity amounting to Rs. 22.5b has already been received from GoPB. Various financial covenants are required to be maintained including Debt Service Coverage Ratio, Loan Life Coverage Ratio and Current Ratio. Revenues of the company are expected to sustain owing to a tariff based on fixed return on equity. Going forward, Funds from Operations are projected to remain stable while the same are expected to be adequate for timely debt repayment.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext: 201) or Mr. Waqas Munir, FRM at 042-35723411-13 (Ext: 8010).

Javed Callea

Applicable Rating Criteria: Industrial Corporates (May 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2017 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited