PACRA Assigns Initial Entity Ratings to Habibullah Coastal Power Company (Private) Limited

Lahore, December 29, 2017 (PPI-OT):The ratings of Habibullah Coastal Power Company (Pvt.) Limited (Habibullah Coastal), an established IPP, reflect its stable business profile emanating from the demand risk coverage under Power Purchase Agreement signed between power purchaser and the company. Meanwhile, the Implementation Agreement provides sovereign guarantee for cash flows, given adherence to agreed performance benchmarks.

Habibullah Coastal has a Gas Supply Agreement with Sui Southern Gas Company (SSGC) for 20 years, ending in Sep 2019. The company can apply for extension of GSA in no less than 2 years or more than 18 months prior to expiry of GSA. The company is in arbitration with SSGC to settle overdue liquidated damages. A favourable decision will provide one time comfort to the profitability of Habibullah Coastal.

The company’s project debt has been paid and it only borrows to meet its short term needs or for BMR purposes. Consequently, the company continues to enjoy sound coverages, underpinned by leveraged structure. However, like other IPPs, its financial profile remains dependent on the payment behaviour of the power purchaser.

Although well-managed, in-house O and M activities expose the company to operational risk; thus upholding strong operational performance in line with agreed performance levels would remain a key driver of the ratings. Meanwhile, extension in GSA with SSGC and arbitration with SSGC are critical and success here would beneficially impact the ratings.

For more information, contact:
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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