Pakistan Credit Rating Agency Limited upgrades ratings of Chiniot Power Limited

Lahore, December 30, 2015 (PPI-OT): The Pakistan Credit Rating Agency Limited (PACRA) has upgraded the long-term and short-term entity ratings of Chiniot Power Limited (CPL) to “A” (Single A) [Previous: A-] and “A1” (A One) [Previous: A2], respectively. These ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

CPL, a bagasse based IPP, achieved commissioning in Nov-15, well before required COD of Jun-16, a result of the management’s focused efforts. This has enabled CPL to gain from healthy availability of bagasse – crushing season just started in November – in the company’s first year of operations. The company’s Operations and Maintenance (O and M) team is well-experienced.

However, its ability to manage plant operations is to be seen. Meanwhile, the management has obtained insurance coverage; providing adequate comfort against operational risk factors. It has firm off-take agreements with NTDC (main buyer) and certain group companies. The Government of Pakistan has given payment guarantee against dues from NTDC. This along with the fact that CPL’s financial burden is designed to be met on operations of around six months in a year is expected to keep eventual financial risk manageable.

Effective execution of plant operations by the in-house O and M team would remain important. Furthermore, external factors such as any adverse changes in the regulatory framework and weakening of financial profile owing to delays in cash flow receipts, may impact the ratings.

For more information, contact:
Hammad Rashid
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