PACRA maintains Entity Ratings of Be Energy Limited

Pakistan heavily depends on imports for its energy requirements due to its limited domestic POL production. A substantial increase in POL import costs was witnessed supported by rupee depreciation (FY22: US$17bln, FY21: US$8bln); however, the demand remains stable. While, during FY23, the demand for POL products, furnace oil (FO), high-speed diesel (HSD), motor spirit (MS), and high octane blended component (HOBC) - which make up ~95% of the total sales, declined by ~15% due to macroeconomic pressures. The transportation and power sectors remain the main consumers, accounting for ~89% of total demand. Despite challenges, the sector's overall outlook - cashflows and liquidity - remains stable.
The ratings drive comfort from Be Energy Limited's ('Be Energy' or 'the Company') strong association with BE Group (previously known as the Bakri Group) ('the Group'). The Group, incorporated in Saudi Arabia, holds a substantial global presence in energy-related businesses that includes downstream operations in oil segment located across Asia and Africa. The Company mainly generates revenue, posting consistent growth, from HSD and MOGAS; however, HSFO and Lubricants also support the topline. Be Energy has successfully expanded its market share, establishing a robust foothold in the local oil marketing segment. A network of 465 retail pumps has been strategically located across the country, while there are two company-operated pump. Rupee depreciation keeps the margins considerable. This along with enhanced storage capacity and hospitality income, generated through subletting unutilized storage units, braces the Company's bottom-line; Also the Company is strategizing to expand its storage capacity on the KPK side to mitigate transportation costs and strengthens its hospitality income. This strategic initiative of a license agreement with Chevron (to use Caltex brand on Be Energy's outlet) will further strengthen the Company's performance in the highly competitive market. In the near future, Be Energy aims to establish 45-50 new retail stations under the Caltex Brand, which will contribute to boosting the Company's volumetric sales and will lead to enhance financial performance. Be Energy holds an adequate financial profile with a moderate working capital cycle and leveraging. While coverages have stretched, lately. The Company has maintained a consistent borrowing level, demonstrating a prudent approach to leveraging while conscientiously managing its debt exposure. The strong business acumen of sponsors remains imperative for ratings.
The ratings remain dependent on Be Energy’s ability to enhance its capacity utilization, through infrastructure and supply chain development, in order to augment its market penetration and strengthen its relative position. Sustainability of bottom-line and key financial metrics, in terms of working capital ratios, coverages and leveraging, remains crucial to the rating.

About the Entity
Be Energy Limited ('Be Energy' or 'the Company') became operational in 2007. The Company is mainly engaged in the procurement, storage, distribution, marketing and import of petroleum product and lubricants. Be Energy is mainly owned by Rawafid Investments LLC (~90.9%), a UAE based company, followed by Energy Petroleum Consultant Company (~8.9%), a Kuwait based company. Rawafid Investments is primarily owned by Bakri family, that holds stake in known as BE Group operating in aviation fuel services, shipping, time charter services, shipping management & marine support services across MENA region.
Be Energy's BoD is chaired by Dr. Zohair Abdul Kader B AlBakri. Mr. Hussain Al Shammaa heads the Company as the CEO. He is aided by a team of experienced professionals.