PACRA maintains Entity Ratings of Be Energy Limited

Pakistan relies significantly on imports to meet its energy demand. During FY24, the consumption of POL products, furnace oil (FO), high-speed diesel (HSD), motor spirit (MS), and high-octane blended component (HOBC) - which make up ~95% of the total sales of the country - declined by ~9% reported at ~14.4mln MT (FY23: ~15.9mln MT). A decrease in total consumption was due to unstable economic conditions and government policy changes. The transportation and power sectors remain the main consumers, accounting for ~80% of total demand. Despite challenges, the sector's overall outlook - cashflows and liquidity - remains stable.
The ratings drive comfort from Be Energy Limited's ('Be Energy' or 'the Company') strong association with BE Group ('the Group'). The Group, incorporated in Saudi Arabia, holds a substantial global presence in energy-related businesses that includes downstream operations in the oil segment located across Asia and Africa. The Company mainly generates revenue, posting consistent growth, from HSD and MOGAS; however, HSFO and Lubricants also support the topline. Be Energy has successfully increased its market share through the expansion of its retail network, currently standing at 478 retail pumps which are strategically located across the country; two of which are COCO retail stations. Rupee depreciation keeps the margins considerable. This along with enhanced storage capacity and hospitality income, generated through subletting unutilized storage units, braces the Company's bottom line. The Company is also strategizing to expand its storage capacity in the KPK to enable new retail station developments, mitigate transportation costs, and strengthen its hospitality income. The strategic initiative of the license agreement with Chevron, to use the Caltex brand on Be Energy's retail stations, has strengthened the Company's performance in the highly competitive market. In the near future, this agreement is expected to give a further boast. Moreover, Be Energy aims to establish new retail stations under the Caltex brand so as to boost the Company's volumetric sales leading to enhanced financial performance. Be Energy holds a strong financial profile with a moderate working capital cycle and strong leveraging. However, coverages remain stretched. The Company has maintained a consistent borrowing level, demonstrating a prudent approach to leveraging while conscientiously managing its debt exposure. The strong business acumen of sponsors remains imperative for ratings.
The ratings remain dependent on Be Energy’s ability to enhance its capacity utilization, through infrastructure and supply chain development, in order to augment its market penetration and strengthen its relative position. Sustainability of bottomline and key financial metrics, in terms of working capital ratios, coverages, and leveraging, remains crucial to the rating.

About the Entity
Be Energy Limited ('Be Energy' or 'the Company') became operational in 2007. The Company is mainly engaged in the procurement, storage, distribution, marketing and import of petroleum product and lubricants.
Be Energy is mainly owned by Rawafid Investments LLC (~90.98%), a UAE based company, followed by Energy Petroleum Consultant Company (~8.99%), a Kuwait based company. Rawafid Investments is primarily owned by Bakri family, that holds stake in known as BE Group operating in aviation fuel services, shipping, time charter services, shipping management & marine support services across MENA region.
Be Energy's BoD is chaired by Dr. Zohair Abdul Kader B AlBakri. Mr. Hussain Al Shammaa heads the Company as the CEO. He is aided by a team of experienced professionals.