The Pakistan Credit Rating Agency Limited
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Faizan Arif

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PACRA Maintains Entity Ratings of Saif Power Limited

Rating Type Entity
Action Maintain Maintain
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Saif Power Limited (Saif Power) runs 225MW Combined Cycle Thermal Power Plant at Sahiwal. The ratings reflect strong business profile of Saif Power emanating from the demand risk covered under PPA signed between NTDC and the company. The implementation agreement further provides sovereign guarantee for cashflows, given adherence to agreed performance benchmarks. The ratings incorporate low operational risk, a result of established performance credentials of GE - the O&M operator. The company operated on gas during the six month period ended June 2018. Saif Power’s receivables continues to remain dependent on power purchaser – CPPA-G – payment behaviour. Saif Power is paying dividend to its shareholders and intends to continue this pattern in future. The company's association with Saif Group provides comfort to the ratings.
Management of receivables amidst rising circular debt will remain critical. Meanwhile, upholding operational performance in line with agreed performance levels would be important.

About the Entity
Saif Power, established in 2004, is an Independent Power Producer operating under the Power Policy 2002. Saif Power's plant commenced operations on April 30, 2010. Saif Power was listed on Pakistan Stock Exchange in December 2014. Saif Holdings Limited, with ~51% stake, is the majority shareholder of the company followed by Orastar Limited (~17%), and Habib Bank Limited (~5%).

The seven-member Board of Directors (BoD), excluding CEO, comprises five representative of the sponsoring family and one independent director. Nominees of Saif Group are experienced professionals. Ms. Hoor Yousafzai chairs the board. The Chief Executive Officer, Mr. Sohail H Hydari recently replaced Mr. Omar Saifullah Khan who had been associated with the company since inception. He is assisted by an experienced team.

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.