Press Release

JCR-VIS reaffirms rating assigned to Sukuk issue of Neelum Jhelum Hydropower Company (Private) Limited

Karachi, September 13, 2017: JCR-VIS Credit Rating Company Limited has reaffirmed the rating of ‘AAA’ (Triple A) assigned to Sukuk issue of Rs. 100 billion of Neelum Jhelum Hydropower Company (Private) Limited (NJHPC). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on June 28, 2016.

NJHPC was setup to design, construct, own, operate and maintain Neelum Jhelum Hydropower Project (NJHPP); a 969MW run-of-the-river project located in the vicinity of Muzaffarabad (AJ&K). As per the latest progress report of the project, total physical completion stands at 93.6%. Expected project completion timeline has been revised. While the 1st electricity generating unit was expected to start production by mid-2017, it is now expected to start production by end-February, 2018, and the other three units are planned to come online in a phased manner by end-June, 2018. While tariff structure is not yet finalized, a proposal has been submitted for approval. Final tariff approved by NEPRA will remain critical to the debt servicing capacity of the company. As per the management, any price escalation due to delay in commercial operation date is likely to be compensated by inclusion in the proposed tariff structure and reduction in interest rates.

The Sukuk is an unlisted, privately placed and non-SLR eligible. It has a tenor of 10 years inclusive of a grace period of 2 years beginning from first drawdown of the Sukuk. First drawdown of Rs. 30b occurred in June’2016; while second drawdown of Rs. 35b was completed at end-Dec’16. Remaining drawdown of Rs. 35b is planned to be drawn by end-Jun’18. As per the waterfall mechanism, an amount equivalent to one-sixth of the installment amount will be deposited each month so that debt payment account (DPA) on the installment date is equivalent to the installment amount. Security also includes unconditional and irrevocable first demand guarantee of the Islamic Republic of Pakistan covering issue amount and profit payments. The guarantee was issued by GoP in September, 2016. Ratings also reflect financial strength and demonstrated support from the parent entity, Water and Power Development Authority (WAPDA), in the form of equity injection and funding support. In case of any shortfall in DPA Account by NJHPC, WAPDA will inject the required funds.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 021-35311861-70 (10 lines) or Mr. Maimoon Rasheed at 042-35723411-13 or fax to 021-35311873.

Javed Callea

Applicable Rating Criteria:

Industrial Corporates (May 2016)
Notching the Issue (June 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