The Pakistan Credit Rating Agency Limited
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Maryam Ijaz

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PACRA Maintains Entity Ratings of BE Energy Limited

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

The ratings reflect BE Energy Limited association with a strong sponsor - Saudi based Bakri Group. The sponsor has presence globally in energy related businesses including operating in the downstream oil segment in various countries of Asia and Africa. The group has also been operating in Pakistan since 1994 as a supplier to PSO before entering the OMC market in 2006. Over the years, BE Energy has managed to gain ~3.3% as at Jun-20 market share with a presence of ~350 retail stations. The company capitalizes on substantial oil storage infrastructure of over 182,000 MTs spread across three terminals located at Port Qasim, Machike, Shikarpur, Sahiwal Depot and one depot at Daulatpur. This has brought forth hospitality income for the company, which currently contributes sizeable chunk to the profitability. With a diversified product mix (HSD: PMG: FO –47%: 47%: 0.3%), BE has been successful in managing the impact of the reduction in demand for FO. Amidst COVID-19, the company has been able to sustain its profitability as it embarks on a conservative strategy to avert losses due to volatility in the oil prices. BE Energy has adequate financial risk profile with moderate coverage indicators and leveraging. The revival of economic activities post June and reduced interest rate is expected to provide relief to the bottom-line.
In addition to the timely development of infrastructure and supply chain, the ratings are dependent on BE Energy's ability to build broad-based market penetration. The company needs to strengthen its relative positioning. Additionally, revenue streams should be diversified.

About the Entity
BE Energy Limited incorporated in Pakistan and commenced its operations in 2007. BE Energy is owned by Rawafid Investments LLC (~90.97%) based in UAE (previously known as Bakri Group) and Energy Petroleum Consultant Company (9%) based in Kuwait. The shareholding of Rawafid Investments LLC lies with the members of Bakri family. Bakri group was founded in late 60's, the group provides aviation fuel services, shipping, time charter services, shipping management & marine support services in the middle east. Primarily, BE Energy is engaged in the procurement, storage, distribution, marketing and import of petroleum products and lubricants.

The board of BE Energy comprises five experienced professionals. Two members are sponsors of Bakri Group, one is the CEO, while two member hold key positions in the group. All the directors are actively involved in the oversight of the company. Mr. Hussain Al Shammaa is the CEO of the company. He has been involved in the oil business for the last 35 years and was previously associated with Kuwait Petroleum Company (KPC). The company has initiated plans to enhance its board to seven members while also adding independent directors.

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.