PACRA Maintains Entity Ratings of HNDS Energy Limited

HNDS Energy Limited (“HNDS” or “the Company”) is operating a 50 MW solar power plant in Goth Gagrawara, Taluka Saleh Pat, District Sukkur, which successfully achieved its Commercial Operations Date (CDO) on February 1, 2024. The assigned ratings remain underpinned by the Company's association with Scatec ASA (“Scatec”), a premier Norwegian renewable energy leader. Scatec maintains comprehensive operational and financial oversight. As of late 2023, Scatec’s global footprint exceeded 4.2 GW of renewable assets across four continents. This project, part of a larger 150 MW solar initiative in Pakistan, is primarily owned by Scatec Sukkur B.V. (75%), a wholly-owned subsidiary of Scatec Solar Netherlands B.V., with the remaining 25% held by Nizam Energy (Private) Limited.
The Company benefits from a 25-year Energy Purchase Agreement (EPA) with CPPA-G, which provides significant revenue visibility and mitigates long-term business risks through sovereign guarantees on payment obligations. During FY24, the plant demonstrated reliable operational performance, generating 97.9 GWh of energy for the national grid in CY24. While revenue remains influenced by solar irradiance and seasonal weather patterns, the EPA’s provisions regarding curtailment compensation and NPMV coverage offer a necessary cushion for cash flow stability.
The total project cost was finalized at approximately USD 38.1 million, financed through a debt-to-equity mix where debt covers 80% of the total cost, split between 60% foreign and 40% local funding. Currently, the Company’s leverage is high as project-related payments have commenced; however, this is expected to gradually decrease as the debt is amortized over the project life. The current bottom-line pressure is primarily attributable to the interim tariff currently in place. The financial footing is projected to turn positive once the tariff true-up process is finalized by NEPRA, which will align the revenue structure with the actual project costs. Liquidity is supported by a significant reduction in receivables, which declined to PKR 251 million from PKR 612 million, reflecting improved payment patterns from the power purchaser.
The ratings draw substantial support from the strong profile of the sponsors and the integrated O&M model managed by Scatec. Furthermore, the arrangement of an SBLC covering two quarterly installments of financial obligations provides additional comfort to lenders. Maintenance of operational benchmarks and timely debt servicing remain vital for the rating profile.
Future ratings will continue to be sensitive to the timely realization of receivables from CPPA-G and the successful conclusion of the tariff true-up. Any significant deterioration in the financial profile or adverse regulatory shifts could impact the credit ratings.

About the Entity
HNDS Energy Limited was incorporated as a private limited company under the repealed Companies Ordinance, 1984 (subsequently replaced by the Companies Act, 2017) on April 28, 2015. The Company transitioned to a public unlisted company on December 30, 2021. The Board of Directors consists of three members from the sponsoring group. Mr. Usman Ahmed is the CEO.