Press Release

Ratings of Quaid-e-Azam Thermal Power (Pvt.) Limited

Karachi, July 04, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings Quaid-e-Azam Thermal Power (Pvt.) Limited (QATPL) at ‘AA/A-1+’ (Double A /A-One Plus). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on October 31, 2017.

The ratings assigned to QATPL takes into account its strong ownership profile with the company being wholly owned by Government of Punjab (GoPb). The company has setup and operate a 1,180 megawatt Re-liquefied Natural Gas (RLNG) based Combined Cycle Gas Turbine (CCGT) thermal power plant at Bhikki Sheikhupura, the project commenced commercial operations (COD) on May 20, 2018 and is operating as per agreed parameters according to the management.

The project cost and financial plan has remained within approved cost of rupee equivalent to US $769.9 million and debt to equity of 75:25. With the declaration of COD, the availability period of the approved financing expired, leaving a significant undisbursed portion of debt needed to complete the approved project cost payments payable post COD. The company has accordingly sought an extension in the availability period of financing up to December 31, 2018 and merged the prorated installment falling due in June 2018 (due to expiry of the financing availability period) with the December, 2018 installment, keeping with the spirit of project financing and enabling it to draw upon the un-availed amounts from the contracted facility. Lenders have confirmed to the management that the aforementioned arrangement has in principally being agreed by them, subject to regulatory approvals and execution of necessary documentation to this effect. JCR VIS believes that completion of this arrangement has high significance for the sustainability of the project which has been setup as a green field project under the project financing arrangements.

The ratings take into account 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. Ratings also take into account the various financial covenants 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. Maimoon Rasheed at 042-35723411-13.

Javed Callea

Applicable rating criterion: Industrial Corporate (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 2018 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