PACRA Maintains Entity Ratings of Engro Elengy Terminal (Private) Limited

Lahore, September 04, 2018 (PPI-OT): The ratings reflect sustained operations of Engro Elengy Terminal (Private) Limited (EETPL), given revenues and cash flows are guaranteed by Sui-Southern Gas Company (SSGC), subject to adherence to agreed parameters. SSGC, the sole intermediary (rated “A+”), has demonstrated timely payments against committed purchases despite challenges. The business profile of EETPL is strong, emanating from GOP’s commitment to manage prevailing energy crises in the country by way of imported LNG. Thus, a sizable and recurring stream of income is ensured.

The ratings incorporate rapid developments in the industry owing to gas shortage in the domestic market. Engro Elengy continues to meet its availability (~95%) – an outcome of technically sound operations and maintenance operator, Excelerate Energy (EE), is a key source of comfort in managing the plant’s operations. A stable stream of revenue leads to build up of surplus cash, which after making committed payments to lenders would be distributed to sponsors regularly, as per policy, going forward.

The working capital cycle is solely the differential of the days of receipts from SSGC and payments to suppliers. Payments from SSGC are secured by way of Stand-By Letter of Credit (SBLC), due to which chances of deterioration in the Working capital cycle are very low. This keeps working capital needs under check. Company’s total long-term debt of PKR 6,345mln as at end-Jun18, payable till Dec23.

Corporate Guarantee from Engro Corporation soothes financial risk. The ratings take significant support from EETPL’s association with Engro Corporation Limited, which has demonstrated financial strength.
The ratings remain dependent on smooth operations of the terminal, and conduct of SSGC with reference to the timely payments to Engro Elengy Terminal. Meanwhile, debt service coverages and other financial related metrics must remain strong.

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