The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA maintains Entity Ratings of National Transmission & Despatch Company Limited

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

The ratings reflect National Transmission and Despatch Company’s (NTDC) ownership structure dominantly owned by the Government of Pakistan (GoP). The company is of strategic importance to Pakistan as being a semi-autonomous power transmission utility. It is mandated to construct, maintain and operate an integrated network of 220 kV, 500 kV, and above transmission lines and grid stations to evacuate power from an installed generation capacity of over 37,000 MW. NTDC’s low business risk emanates from its leading market position and strong uphold on the transmission system in terms of its technical and business expertise. Moreover, the company’s operational expenses being part of its tariff determination mechanism reflect positively on the company’s performance and business risk profile. The Company's transmission losses are aligned with the globally accepted parameters and are within the limits allowed by NEPRA. Ratings also take into account the Company’s moderate financial risk emanating from sizable equity, an adequate capital structure that comprises mainly of foreign loans relent in Pak Rupee to NTDC and borrowing from the local banks. NTDC has also obtained a financing facility of PKR 6.4bln on its own financial positions. Furthermore, in-house working capital management is reflected by strong internal cash generation and constructive management of circular debt by adjusting its receivables with foreign loans relent to NTDC. The ratings also incorporate NTDC’s strengthened position resulting in the completion of ~30 expansion projects. Market share is expected to remain strong as NTDC has enhanced its transmission capacity to 55,300MVA by Jun-21. Power evacuation from Neelum Jehlum, Dasu Dam are some of the Company's most significant pipeline projects.
Effective management of upcoming projects, in addition to ERP system implementation, consistency in financial profile and risk matrices remains critical for the ratings. Meanwhile, reconciliation of outstanding adjustments regarding Business Transfer Agreements and sustained competitive positioning are also imperative for ratings.

About the Entity
National Transmission and Despatch Company were incorporated as a Public Limited Company on Nov 06, 1998, under the Companies Ordinance 1984 (now Companies Act 2017), with its Head Office in Lahore. After having a Certificate for Commencement of Business, NTDC started its commercial operations on March 01, 1999. NEPRA granted a Transmission License to NTDC in December 2002 to engage in the exclusive transmission business for a term of thirty (30) years. NTDC's 1st tariff was determined by NEPRA in April, 2004. Board of directors of NTDC comprises eleven experienced professionals: six independent directors, four members being non-executive directors are representatives from Ministry of Energy (Power Division), Planning Commission and CPPA-G. Engr. Dr. Azaz Ahmad is the current Managing Director of the company and a member of the Board as well.

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.