Press Release

VIS Reaffirms Ratings of KotAddu Power Company Limited

Karachi, December 2, 2019: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of KotAddu Power Company Limited (KAPCO) at ‘AA+/A-1+’ (Double A Plus/A-One Plus). The medium to long-term rating of ‘AA+’ denotes high credit quality coupled with strong protection factors. Moreover, risk factors may vary slightly with possible changes in the economy. The short-term rating of ‘A-1+’ denotes highest certainty of timely payment, liquidity factors are excellent and just below risk free Government of Pakistan’s short-term obligations. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 31, 2018.

The ratings assigned to KAPCO take into account its strong ownership profile being majority owned by Government of Pakistan (GoP) through its representative Water and Power Development Authority (WAPDA). The ratings draw strength from the company’s strong business profile with demand risk mitigated under Power Purchase Agreement (PPA) signed with WAPDA. The ratings also draw comfort from government guaranteed cash flow stream under the agreement upon meeting certain performance benchmarks. However, the escalating inter-corporate debt is a challenge for maintaining the financial risk profile of the company. Moreover, upholding operational performance in line with agreed performance levels would remain a key rating driver. Given the expiry of PPA in June, 2021, further renewal of the ratings will depend upon outcome of the company’s negotiation with the government regarding the renewal of PPA.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz (042-35723411-13, Ext. 8004) and/or the undersigned (Ext. 201) at 021-35311861-66 or email at .

Javed Callea

Applicable rating criterion: Corporate (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 .

VIS Credit Rating Company Limited