Press Release

JCR-VIS Reaffirms Ratings of Neelum Jhelum Hydropower Company (Pvt.) Limited

Karachi, January 02, 2019: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the rating of “AAA’ (Triple A) assigned to Sukuk issue of Rs. 100 billion of Neelum Jhelum Hydropower Company (Pvt.) Limited (NJHPC). The medium to long-term rating of ‘AAA’ denotes highest credit quality with negligible risk factors being only slightly more than risk-free Government of Pakistan’s debt. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on September 13, 2017.

The rating assigned to the Sukuk issue takes into account first demand guarantee issued by Government of Pakistan covering issue amount of the Sukuk along with profit payments. Additionally, a debt payment account (DPA) is also operating for the timely servicing of the upcoming installments. In case of any shortfall in DPA by NJHPC, WAPDA will inject the required funds. Ratings also incorporate strong financial muscle and implicit support from the parent entity, Water and Power Development Authority (WAPDA), in the form of equity injection and funding support. All four units became operational by end-Aug’18 with plant attaining full generation capacity; the first unit was commissioned in April’18, followed by the remaining three units coming into operation, each after almost one month’s interval.

The Sukuk is unlisted, privately placed, 10-year tenor instrument with grace period of two years. The first payment has been paid recently. The tariff structure has not yet been finalized since the provisional tariff given by NEPRA is not acceptable to the company therefore a revision application has been filed with the regulator. Final tariff approval by NEPRA will be crucial to the debt servicing capacity of the company and the assigned ratings. The ratings are dependent upon tariff structure being approved in line with debt service obligations of the company.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.

Javed Callea

Applicable rating criterion:
Industrial Corporate (May, 2016)
Notching the Issue (June, 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited 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.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.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited