The Pakistan Credit Rating Agency Limited
03-May-18
Analyst
Muhammad Hassan
muhammad.hassan@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Correlation between long-term and short-term rating scale | Jun-17
- Methodology | Criteria Modifiers | Jun-17
- Methodology | Independent Power Producers (IPP) | May-17
Related Research
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PACRA Maintains Entity Ratings of Saif Power Limited
| Rating Type | Entity | |
|
Current (03-May-18 ) |
Previous (31-Oct-17 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+ | A+ |
| Short Term | A1 | A1 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
Saif Power Limited (SPL) runs 225MW Combined Cycle Thermal Power Plant at Sahiwal. The ratings reflect strong business profile of SPL 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 mainly operates on HSD due to non availability of gas. SPL’s receivables continues to remain dependent on power purchaser – CPPA-G – payment behaviour. SPL 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
SPL, established in 2004, is an Independent Power Producer operating under the Power Policy 2002. SPL's plant commenced operations on April 30, 2010. SPL 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 (19%), and Habib Bank Limited (7%).
The seven-member Board of Directors (BoD), excluding one independent director, is representative of the sponsoring family. Nominees of Saif Group are experienced professionals. Mr. Salim Saifullah Khan resigned from the board and now Ms. Hoor Yousafzai chairs the board. The CEO, Mr. Omar Saifullah, has been associated with the company since inception. He is assisted by an experienced team.