Karachi, November 17, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of ‘AA-/A-1’ (Double A Minus /A-One) to Quaid-e-Azam Solar Power (Private) Limited (QASPL). Outlook on the assigned ratings is ‘Stable’.
The ratings assigned to QASPL takes into account its ownership profile with Government of Punjab (GoPb) holding 100% stake in the company. The experience of the Engineering, Procurement and Construction & Operations and Maintenance contractor, TBEA Xinjiang Sunoasis Co. Ltd, in executing similar projects in the past largely mitigates the associated operational risk. Project cash flows are a function of tariff defined by NEPRA.
QASPL is part of GoPb initiative to establish a 1,000 MW solar park in Bahawalpur. The company has secured a power generation license from NEPRA for 25 years, lasting till December, 2039. The energy is purchased by Central Power Purchasing Agency (Guarantee) Limited under the Energy Purchase Agreement. As per the implementation agreement, payment obligations of the power purchaser are guaranteed by the Government of Pakistan.
The plant operated at 18.28% capacity with annual production of 160.09 GWh during the first year of operation. The capacity factor of the plant is subject to 0.7% annual degradation. Total energy generated during FY16 surpassed the benchmark energy by 6,792.59 MWh. Total project cost amounted to Rs. 15.2b with debt to equity ratio of 75:25. The company availed a long-term loan facility amounting to Rs. 11.1b with a tenor of 11 years, including a grace period of 1 year. As per the agreement, QASPL is required to maintain a minimum Debt Service Coverage Ratio (DSCR) of 1.25 and minimum current ratio of 1.0. At end-FY16, DSCR was reported 2.75 while current ratio stood at 1.32.
The company’s profitability draws support from high margins while funds from operations are projected to meet future debt obligations.
For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext: 234) or Mr. Waqas Munir, FRM at 042-35723411-13 (Ext: 8010).
Applicable Rating Criteria: Industrial Corporates (May 2016)
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