The Pakistan Credit Rating Agency Limited
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Faizan Arif

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PACRA Assigns Initial Entity Ratings to Oursun Pakistan Limited

Rating Type Entity
(01-Mar-19 )
Action Initial
Long Term A-
Short Term A2
Outlook Stable
Rating Watch -

Oursun Pakistan Limited (Oursun Pakistan), 50MWp – incorporated in May 2015, operates under the Renewable Energy Policy 2006. The company achieved financial close in June 2017, while funds released from banks in December 2017 owing to financing approvals pending from State Bank of Pakistan. The rating incorporates commissioning of plant, achieved on 30th November 2018. The company opted for upfront tariff. Under the upfront tariff regime, any variability in solar energy is to be borne by the Company, due to which its cash flows may face seasonality. The company signed Energy Purchase Agreement with Karachi Electric Limited for a period of 25 years. O&M contract signed with OMS (Pvt.) Limited for a period of two years. Unlike other IPPs, where GoP has provided a sovereign guarantee against dues from CPPA-G, Oursun Pakistan as per EPA shall sell and deliver and the Purchaser shall accept all of the net delivered energy generated by the Complex and delivered to the Purchaser at the Interconnection Point, and the Purchaser shall pay. However, the Company’s ability to manage contracted parameters over multiple solar cycles is yet to be seen. The company has availed both foreign and local loan to finance its debt component. Foreign loan is availed from United National Bank Limited (UK). Local loan is received from United Bank Limited (lead arranger), The Bank of Punjab and Askari Bank Limited. The company is required to maintain DSRA equivalent to two quarterly debt repayments under financing documents; this requirement is being met by mix of cash deposit and SBLC from sponsors. Going forward, the company plans to fund DSRA from internal cashflows.

Upholding operational performance in line with agreed performance levels is important. Build-up of DSRA from internal sources, receipt pattern from power purchaser, debt repayment behavior and liquidity cushion would impact the direction of ratings. External factors such as any adverse changes in the regulatory framework and weakening of financial profile may impact negatively.

About the Entity
Oursun Pakistan, incorporated in May 2015, Renewable Energy Independent Power Producer (RE IPP) operating under the RE Policy 2006 by AEDB. Solar plant is being set up at Gharo, District Thatta, Sindh. The total cost of the project is ~USD 62mln. Debt financing constitutes 75% of the project cost i.e. USD 46.5mln, which is financed from local and foreign financial institutions in ratio of 72:28. The company signed offshore supply contract with TBEA Xinjiang Sunoasis Company Limited and onshore contract with TBEA XINTE Energy (Pvt.) Limited. RCOD was set 10 months from financial close i.e. October 2018.

Oursun Pakistan’s major sponsor is M/s Future Energy Partners (62.5%) shareholding followed by MCBFSL Trustee PNO Pakistan Fund (25%), Roomi Enterprises (Pvt.) Ltd (12.5%) and individuals (0.004%). Oursun Pakistan’s Board of Directors (BoD) comprises three members. Zain-ul-abidin is the Chief Executive Officer with 30+ years of diversified experience. He is the member of Institute of Chartered Accountaant of Pakistan and qualifeid Chartered Accountant since 1987. He is assisted by a qualified management team with relevant industry experience.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.