Pakistan Credit Rating Agency Limited assigns ratings to Foundation Wind Energy-I Limited

Lahore, May 16, 2014 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has assigned long-term entity rating of “A” (Single A) and short-term rating at “A1″ (A One) to Foundation Wind Energy I Limited (FWEL-I). These ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The ratings reflect the financial strength of Independent Power Producer business model once adherence to benchmarks is achieved. The project is still subject to completion risk. Since its financial close in Jul-13, the company has progressed ~ 80% putting it in a good position to meet committed commissioning target of Feb-15.

The ratings incorporate the engagement of Nordex, Germany as the Lead EPC and Operations and Maintenance Operator. Comfort is drawn from a fixed price EPC contract with Nordex, secured by a corporate guarantee from its parent – Nordex Germany SE.

This is further supported by successful execution by Nordex of a wind based power project in Pakistan. At the same time, the ratings incorporate FWEL-I’s exposure to the risks in the set-up stage including a) stressed infrastructure that may disrupt timely availability of requisite resources, b) performance of the EPC contractors in the wind corridor of Gharo which features semidiurnal lands, c) equipment malfunctioning, and d) others, including law and order situation.

Post commissioning, the nature of the projected cash flow stream is considered stable emanating from a long-term Energy Purchase Agreement. This allows guaranteed returns subject to adherence to agreed performance benchmarks.

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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