Pakistan Credit Rating Agency Limited maintains ratings of Foundation Wind Energy – I Limited

Lahore, June 29, 2015 (PPI-OT):The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term entity ratings of Foundation Wind Energy I Limited (FWEL-I) at “A” (Single A) and “A1″ (A One), respectively. These ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

FWEL-I achieved commissioning on April 11, 2015, after experiencing a delay. The true-up of tariff, incorporating applicable indexation factors, is yet to be finalized. In this regard, favourable outcome of ongoing negotiations with stakeholders including EPC contractor and regulator remains imperative.

The ratings capture regulated structure of FWEL’s business, whereby revenues and cash flows are guaranteed by the power purchaser given adherence to agreed operational parameters. The operational risk is mitigated through outsourcing of O and M to Nordex Singapore and Descon Engineering – as both are reputable organizations; comfort is drawn from their ability to operate effectively.

Risk related to wind variability would be absorbed by the power purchaser – thus ensuring benchmark revenues in case wind risk transpires. The next debt payment, worth ~PKR 933mln, will be due in Jul-15. Arrangements are in place by way of a non-recourse RF Facility (PKR 1,575mln) secured by FF and FFBL (group entities) collaterals. This should facilitate debt repayments in a timely manner.

Meanwhile, the company’s association with Fauji Foundation group provides comfort to the ratings. External factors such as any adverse changes in the regulatory framework and /or volatility/delays in cash flow receipts, may impact the ratings.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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