The Pakistan Credit Rating Agency Limited
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Saadat Mirza

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PACRA Upgrade Entity Ratings of Oursun Pakistan Limited

Rating Type Entity
(26-Feb-21 )
(28-Feb-20 )
Action Upgrade Maintain
Long Term A A-
Short Term A1 A2
Outlook Stable Stable
Rating Watch - -

Oursun Pakistan Limited (Oursun Pakistan), 50MWp – incorporated in June 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 and successful operations since its COD. Electricity generated for FY20 was 88,495MWh as against the annual benchmark of 78,840MWh, while on the other side its capacity factor is also 20% against the benchmark of 18%. 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 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. Company is meeting its working capital requirements through internally generated cash flows and has not taken any facility for short term borrowings. The company has paid nine quarterly instalments as at end Dec-20 in a timely manner and has not taken any deferment facility of SBP. 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 that has been adhered and intact up till now.
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. While on the other hand inflows are ensuing timely as well to enable the OPL to pay off its obligations. 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.

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 five members. Zain-ul-abidin is the Chief Executive Officer with 30+ years of diversified experience. He is member of Institute of Chartered Accountants 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.