PACRA Upgrades Entity Ratings of Hawa Energy (Pvt.) Limited

Hawa Energy Private Limited (HEPL) is operating a 49.735MW wind power plant, located in Jhimpir, District Thatta, Sindh. The project is established under the Renewable Energy Policy 2006 by the Alternative Energy Development Board (AEDB), which offers a guaranteed internal rate of return, cost indexation, and pass-through tariff structure. The plant achieved its commercial operations date (COD) in March 2018. Under the signed Energy Purchase Agreement ("EPA") with CPPAG, the plant will provide electricity to the national grid for a period of 20 years from the COD. The project revenues and cash flows are exposed to two main risks. First; wind risk. Under the upfront tariff regime, any variability in wind speeds is to be borne by the Company, due to which its cash flows may face seasonality. Second; operational risk. The Company has to maintain the plant’s capacity factor at 35% annually, and is ready to deliver electricity to the national grid. Comfort is drawn from General Electric – the O&M operator – having both international and local market experience. The Company has adequate insurance coverage. Further The Government of Pakistan has provided a sovereign guarantee against dues from CPPA-G. The working capital requirements are fulfilled through in-house adequate cash flow generation. Net cash from operating activities of the Company stood at ~PKR 3,166mln for CY23 (CY22: ~PKR 3,833mln). During CY23, the plant delivered total net energy of 115.8GWh with the capacity factor of 27% below the required benchmark due to variation in wind speed and Govt. led curtailments (CY22: 140.4GWh) to the national grid. The change in output delivered is subject to wind speed pattern in the region. HEPL is successfully making repayments against its project debt (USD 95.3mln) that is entirely obtained from US International Development Finance Corporation (DFC). The company has successfully repaid approximately 50% of its long-term project debt which adds positively to the financial risk profile.
Upholding operational performance in line with agreed performance levels is important. Receipt pattern from power purchaser, debt repayment behavior and liquidity cushion would impact the directions of ratings. Going forward, timely repayment of significant portion of project debt along with meeting operational benchmarks will contribute towards driving the ratings upwards.

About the Entity
HEPL is a wholly owned subsidiary of Hawa Holdings Limited, a company incorporated in British Virgin Islands. The sponsors of the company are JCM Power (51%), DL Energy and Asma Capital (35%) and Mr. Bruno C. Bucari (14%). Both DL Energy and JCM Power have a proven history of implementing power projects globally with a focus on renewable sector. The total cost of the project was USD 127.1mln which was financed with a debt-to-equity ratio of 75:25. HEPL board comprises of seven members from the sponsoring companies. The Chairman and CEO Mr. Muhammed Ali, an engineer by profession has over a decade of experience in the Energy Sector with exposure to key developments in the renewable energy industry. He is accompanied by a team of experienced individuals to assist him on day-to-day operations.