Pakistan Credit Rating Agency Limited maintains entity ratings of Lalpir Power Limited

Lahore, November 23, 2015 (PPI-OT): The Pakistan Credit Rating Agency Limited (PACRA) has maintained the long-term and short-term entity ratings of Lalpir Power Limited (Lalpir) at “AA” (Double A) and “A1+” (A One plus), respectively. The ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

The ratings of Lalpir reflect its low business risk profile supported by a financial structure, whereby the Government of Pakistan has guaranteed cash flows subject to adherence to agreed performance benchmarks. Lalpir has experienced better operational performance, an outcome of corrective measures adopted to improve efficiency factor.

However, negative delta, though reducing, between actual and required efficiency factor remained a drag. Conversion of plant to coal and participation in planned investment by parent – Nishat Group – to set up a new 660MW coal power plant are at nascent stage. The management expects any material progress in near future is less likely as finalization of terms with the power purchaser take time. The company is adequately managing its financial profile.

Upholding operational performance in line with agreed performance levels would remain a key rating driver. Accumulation of debt to finance CAPEX – the coal conversion project and/or fresh investment in new power project – may impact financial risk profile of the company. Meanwhile, any significant increase in overdue receivables, as a result of rising circular debt, may negatively 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