The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Maintains Entity Ratings of Engro Elengy Terminal (Private) Limited

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

The ratings reflect sizable improvement in profile of Engro Elengy Terminal (Private) Limited (EETPL), as captured by growing profitability and declining leverage attributable to scheduled repayments. The revenues and cash flows are guaranteed by Sui-Southern Gas Company (SSGC), subject to adherence to agreed parameters. SSGC, the sole intermediary, has demonstrated timely payments against committed purchases despite challenges. The business profile of EETPL is strong, emanating from GOP's commitment to managing energy needs of the country by way of imported LNG. Being the pioneer in the industry and guaranteed off-takes under LSA agreement with SSGC, EETPL poses a significant threat for new entrants in the industry. ETPL has initially planned to increase its capacity to 1000mmcfd however currently installed FSRU has usual capacity of 630mmcfd (peak hours: 680mmcfd). Thus, a sizable and recurring stream of income is ensured. Another significant factor is the enhanced ownership stake of Vopak LNG Holding B.V. in the Company's Parent Elengy Terminal Pakistan Limited (44%). Vopak LNG Holding B.V. is an international player with sizable footprint in terminal businesses worldwide which adds strength to the business profile attributable to successful business model of Vopak LNG Holding B.V. of establishing a joint venture with local players. Engro Elengy continues to meet its availability (~95%) - an outcome of technically sound operations and maintenance operator, Excelerate Energy (EE), is a key source of comfort in managing the plant's operations. A stable stream of revenue leads to build-up of surplus cash, which after making committed payments to lenders is being distributed to sponsors regularly, as per policy. The working capital cycle is solely the differential of the days of receipts from SSGC and payments to suppliers. Payments from SSGC are secured by way of a Stand-By Letter of Credit (SBLC), due to which chances of deterioration in the Working capital cycle are very low. This keeps working capital needs under check. Company's total long-term debt of PKR 2,921mln as of end-March21, payable till Dec23. Corporate Guarantee from sponsor group provides further strength to the financial profile of the Company.
The ratings take significant support from EETPL's association with Engro Corporation Limited and Vopak LNG Holding B.V. The ratings remain dependent on smooth operations of the terminal, and conduct of sole buyer with reference to the timely payments to Engro Elengy Terminal. Meanwhile, debt service coverages and other financial-related metrics must remain strong.

About the Entity
Engro Elengy Terminal (Private) Limited (EETPL) is a Private Limited Company, incorporated in Pakistan on January 9, 2014, specifically for the purpose of establishing and operating an LNG Terminal for the receipt, storage and re-gasification of LNG. EETPL commenced its operations on March 29, 2015, as the first-ever LNG Terminal Operator in Pakistan. The LNG Terminal of the Company is located in South Western Zone, Berth no.13, Port Qasim, Karachi. The company has leased a 600mmscfd baseload Floating Storage and Re-gasification Unit (FSRU) from Excelerate Energy (EE), who is also an operation and maintenance operator of the company. Elengy Terminal Pakistan Limited holds 100% of the shares of Engro Elengy Terminal (Pvt) Ltd. Recently, Vopak LNG Holding B.V. extended its shareholding in Elengy Terminal Pakistan Limited in CY18. Consequently, Engro Corp and Vopak LNG Holding B.V. now own 56% and 44% respectively. The board of directors (BoD) of Engro Elengy Terminal comprises three members including the CEO. Two members represent Engro Group while Mr. Jarmo Stoopman represents Vopak LNG Holding B.V. Mr. Yusuf Siddique joined Engro Elengy Terminal as CEO in April 2020. Prior to this, he has headed the Shell businesses in Tunisia and Jordan. Yusuf is an energy industry executive with about 24 years of experience leading upstream, downstream & renewables energy ventures in Shell, Eni & BP. He has a global career profile with diverse assignments in Tunisia, Jordan, Oman, Netherlands, Iran, Italy & Pakistan.

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.