Pakistan Credit Rating Agency Limited maintains ratings of Nishat Power Limited

Lahore, December 18, 2015 (PPI-OT): The Pakistan Credit Rating Agency Limited (PACRA) has maintained the long-term and short-term entity ratings of Nishat Power Limited at ‘A+’ (single A plus) and ‘A1’ (A One), respectively. The ratings denote a low expectation of credit risk emanating from strong capacity for timely repayment.

Nishat Power Limited runs a 200MW power plant. The company operates in a regulated power sector, wherein it enjoys sovereign guarantee against receivables from power purchaser – NTDC; given adherence to agreed performance benchmarks. Post-expiration of operations and maintenance (O and M) contract with Wartsila Pakistan, the management has decided to keep O and M function in-house. The company expects cost-savings; however, it is yet to be seen.

The company’s financial risk profile witnessed improvement given, i) relatively better repayment behaviour of power purchaser in the recent period, ii) and the company’s conservative dividend payout; thus enabling to manage working capital needs internally. However, the company continues to avail forbearance period in making repayments against long-term project debt. Nishat Group has planned to venture into, i) coal power project through incorporation of Nishat Energy Limited; NPL is to hold 20% stake in Nishat Energy, ii) Lalpir Solar, an up to 20 MW solar power project; NPL would hold 34% in it. Material progress on these initiatives may take time.

Upholding strong operational performance in line with agreed performance levels would remain important. Meanwhile, any significant delay in payments by power purchaser, thereby leading to higher reliance on short term borrowings, may impact financial profile.

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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