The Pakistan Credit Rating Agency Limited
07-Mar-17
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Rating Modifiers | Outlook and Rating Watch | Jun-16
- Correlation between Long-term and Short-term rating | Jun-16
- Methodology | Independent Power Producers (IPP) | Jun-16
Related Research
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PACRA Assigns Entity Ratings to Halmore Power Generation Company Limited
| Rating Type | Entity | |
|
Current (07-Mar-17 ) |
||
| Action | Initial | |
| Long Term | A | |
| Short Term | A1 | |
| Outlook | Stable | |
| Rating Watch | - | |
Halmore Power Generation Company Limited (HPGCL) runs a 225MW power plant. The company operates in the regulated power sector. It enjoys sovereign guarantee against receivables from power purchaser - NTDC - given adherence to agreed performance benchmarks. The Company's operations and maintenance operator, General Electric International (GE), is a key source of comfort in managing the plant's operations. The Company's financial risk profile is largely dependent on repayment behaviour of the power purchaser. In recent periods, availability of primary fuel was challenging; however operational performance remained healthy. Although energy payments observed improvement, the Company’s cash cycle witnessed a surge on account of delayed capacity payments by CPPA. HPGCL funds its working capital requirements mainly through short term borrowing. The company avails forbearance period while meeting its financial obligations; nevertheless, the repayment behavior has improved.
Upholding operational performance in line with agreed performance levels would remain a key rating driver. Improving repayment behaviour would be ratings positive. Any significant increase in overdue receivables, as a result of rise in circular debt, may impact the ratings.
About
the Entity
Halmore Power Generation Company Limited (HPGCL), an Independent Power Producer (IPP) with gross capacity of 225 MW, operating under 2002 power policy, is a combined gas cycle turbine plant with gas as primary and HSD as secondary fuel. The company commenced commercial operations in June 2011. Mian Muhammad Sharif – a non-resident Pakistan business magnate – owns 99.99% shares of the company.
The five-member Board of Directors (BoD), including one executive director, is representative of the sponsoring family. Mr. Zaheer Ahmed is the chief executive officer since Jan17, he has over 26 years of experience in construction, operation and maintenance of power generation and transmission.