Press Release

VIS Reaffirms Entity Ratings of Foundation Wind Energy-II Limited

Karachi, June 28, 2019: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Foundation Wind Energy-II Limited (FWEL-II) at ‘A+/A-1’ (Single A-Plus/A-One). The long-term rating of ‘A+’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on February 16, 2018.

The ratings assigned to FWEL-II take into account its strong ownership profile with Fauji Group, through Fauji Foundation and Fauji Fertilizer Bin Qasim Limited, holding major stake in the company. IIF Wind Two Limited (CapAsia - a Malaysian private equity firm) and Tapal Group are the other major sponsors of the company. The project is established under the Policy for Development of Renewable Energy for Power Generation, 2006 which offers a guaranteed internal rate of return, cost indexation and pass-through tariff structure. Moreover, presence of reputable operational and maintenance contractor carrying sound track record mitigates the associated operational risk.

Revenues generated, adjusted for sales tax, increased during FY18 on account of higher tariff for the year compensating for the lower energy dispatch during FY18. Actual electricity generation of the plant has been lower than the benchmark generation on account of lower wind speed; however, the associated risk is passed on to the power purchaser. Liquidation Damages, in case of non-availability of plant, are completely covered by the O&M contractor. Gearing and leverage of the company have improved on a timeline basis on account of periodic repayment of borrowings and enhanced equity base. With decline in borrowings and largely stable cash flows, coverages are expected to improve, going forward.

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: Corporates (May, 2019)

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 .

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