PACRA Maintains the Entity Ratings of Gul Ahmed Electric Limited

Gul Ahmed Energy Limited has set up a 50 MW wind power plant—Gul Ahmed Electric Limited (“GEL” or “the”Company”) located in Jhimpir, District Thatta, Sindh. GEL is awarded a cost-plus tariff, with the payments to be received from CPPA-G backed by the sovereign guarantee. The plant successfully achieved its Commercial Operations Date (COD) on April 7, 2022, and has been supplying electricity to the national grid since then. Comfort is drawn from the entity’s group association, having strong financial backing and relevant experience in successfully commissioning and operating other power plants. Hydrochina International Engineering Company Limited & Hangzhou Huachen Electric Power Control Company were the EPC contractors for the project and shall also remain its O&M operators for the remaining tenure of the PPA. The O&M contractor will be responsible for maintaining the operational benchmarks (Availability: 98%, Capacity: 38%). The Company revenues and cash flows remain exposed to wind risk due to seasonal variation in the wind speed, which may affect electricity generation, and ultimately cash flows may face seasonality. During FY24, the actual production of the plant stood at 118,718 MWH (FY23: 143,933 MWH) with a load factor of 27.10% (FY23: 32.86%) while maintaining its operational benchmarks. The actual production is subject to the actual load demanded and wind conditions during the reporting period. As a result, the revenue of the Company stood at PKR 2,671mln during FY24 (FY23: 2,039mln) recorded against the energy delivered to the National Grid. Delayed payments from the power purchaser (CPPAG) against energy invoices remain a challenge for the Company due to the ongoing circular debt issue. As of June’24, the Company’s outstanding receivables stood at PKR 1,032mln. These receivables are backed by a sovereign guarantee under the implementation agreement, which provides additional comfort. The Company holds both foreign and local long-term project debt repayable over a thirteen- and ten-year period, respectively, with 13% of foreign and 25% of local loans repaid.
External factors such as any adverse changes in the regulatory framework may impact the ratings. Going forward, the capacity of the Company to generate stable cash flows in order to make timely repayments against the project debt remains crucial. With rising concerns about circular debt, the trend of payments received from CPPA-G against invoices will further impact the Company’s liquidity profile.

About the Entity
Gul Ahmed Electric Limited, incorporated in Dec 2015, is a Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by AEDB. Being a wholly owned subsidiary of Gul Ahmed Energy Limited, the Company's primary venture is a 50MW wind IPP located in Jhimpir, District Thatta, Sindh. Under the leadership of CEO Mr. Danish Iqbal, who has been with the Company since its inception, GEL benefits from his extensive experience in the field. The total investment for the project amounts to USD 62.95mln, with debt financing comprising 80% of the project cost, equating to USD 50.36mln.