The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Mubashir Nazir

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Oursun Pakistan Limited

Rating Type Entity
(25-Feb-22 )
(26-Feb-21 )
Action Maintain Upgrade
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Oursun Pakistan Limited (The Company), 50MWp – incorporated in June 2015, operates under the Renewable Energy Policy 2006. The company achieved financial close in June 2017. The rating incorporates commissioning of plant, achieved on 30th November 2018 and successful operations since its COD. 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. Given the healthy demand the plant operated at higher (20%) than required capacity (18%) in FY21, generation recorded to 90,872MWh. Performance of the plant also remained above the NEPRA laid performance parameters i.e. benchmark generation of 78,840MWh. Profitability was reported at PKR 800mln in FY 21 (FY20: PKR 1,066mln, FY19: PKR 148mln). Overall liquidity profile remains sound on the back of healthy cash flow generation. 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. Leverage indicators depict improvement with the timely repayment of debt. Further, the Company is meeting its working capital requirements through internally generated cash flows and has not taken any facility for short term borrowings. The company is required to maintain DSRA equivalent to two quarterly debt repayments under financing documents; this requirement is being met by internally generated cash from operations.
Low business risk and improving financial profile as evident from healthy cash flow generation, sound debt coverage metrics and improvement in leverage indicators. Business risk profile draws support from O&M contract placed with well-reputed contractor, OMS Pvt Ltd, having extensive experience in renewable energy sector. Ratings also take into account the sound sponsors’ profile having considerable experience in power sector. Further, energy purchase agreement of 25 years signed with K-Electric along with guaranteed payments through escrow mechanism mitigates off-take risk and continues to provide comfort to the ratings. 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.

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 (72.5%) shareholding followed Roomi Enterprises (Pvt.) Ltd (27.5%) and individuals (0.003%). Oursun Pakistan’s Board of Directors (BoD) comprises five members. Zainul-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.