Press Release

VIS maintains the Long Term Rating of Quaid-e-Azam Thermal Power (Private) Limited at 'AA' (Double A), revises the Short Term Rating to 'A-1' (A-One)

Karachi, April 28, 2020: VIS Credit Rating Company Limited (VIS) has maintained the long-term entity rating of Quaid-e-Azam Thermal Power (Private) Limited (QATPL) at ‘AA’ (Double A), while the short-term rating has been revised from ‘A-1+’ (A-One Plus) to ‘A-1’ (A-One). 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 high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on July 04, 2019.

QATPL is wholly owned by the Government of Punjab (GoPb). The company owns and operates Re-Liquefied Natural Gas (RLNG) based Combined Cycle Gas Turbine (CCGT) power plant of 1,163 MW generating capacity at Bhikki, District Sheikhupura - Punjab. The ratings draw comfort from the presence of a clause in the Power Purchase Agreement (PPA) whereby QATPL will continue to receive capacity payments during the period of non-supply of gas. In addition, the “Suspension” clause in the PPA allows the company to suspend its plant operations if the receivable amount from Central Power Purchase Agency (Guarantee) Limited (CPPA) at any point in time remains outstanding for 60 days or more, while QATPL will continue to receive capacity payments during the suspension period. This provision further protects the company from the circular debt risk.

The assigned ratings also incorporate higher sales, strengthened financial profile as evident from improved profit margins and notable increase in cash flows generation. Albeit, finance cost increased considerably along with elevated exchange loss pertaining to off-shore payments to suppliers, bottom-line increased on the back of higher sales, gross margins and other income mainly related to interest income on delayed payments from CPPA-G. Capitalization indicators have remained stressed due to higher overall debt levels, despite augmentation in equity. Meanwhile, excluding the impact of exchange gain/loss, cash flows from operations have remained sufficient, leading to adequate debt service coverage. However, in case of potential contingent liability falling due going forward, currently at arbitration stage, the company may face stress on liquidity given low cushion available for meeting extra liquidity requirements amid fully utilized working credit lines. Corporate governance framework has strengthened given appointment of new independent directors and female representation on board.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable rating criterion: Corporates (May 2019)

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