Hawa Energy (Pvt.) Limited

CREDIT RATING REPORT | Apr-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
04-Apr-25 A+ A1 Stable Maintain -
05-Apr-24 A+ A1 Stable Upgrade -
27-Apr-23 A A1 Stable Maintain -
27-Apr-22 A A1 Stable Initial -
About the Entity

JPL is a wholly owned subsidiary of JPH Holding PTE Ltd (Singapore). The ultimate sponsors of the company are JCM Power (94.93%), Burj Energy International Management Limited Dubai (5.07%). The total cost of the project was USD 125mln which was financed with a debt-to-equity ratio of 75:25. JPL board comprises five members from the sponsoring companies. The Chairman and CEO Mr. Muhammed Ali, an engineer by profession has over a decade of experience in the Energy Sector with exposure to key developments in the renewable energy industry. He is accompanied by a team of experienced individuals to assist him on day-to-day operations.

Rating Rationale

Hawa Energy Private Limited (HEPL) is operating a 49.735MW wind power plant, located in Jhimpir, District Thatta, Sindh. The project is established under the Renewable Energy Policy 2006 by the Alternative Energy Development Board (AEDB), which offers a guaranteed internal rate of return, cost indexation, and pass-through tariff structure. The plant achieved its commercial operations date (COD) in March 2018. Under the signed Energy Purchase Agreement ("EPA") with CPPAG, the plant will provide electricity to the national grid for a period of 20 years from the COD. The project's revenues and cash flows are subject to two primary risks. First, wind risk—under the upfront tariff regime, any fluctuations in wind speeds are absorbed by the Company, potentially leading to seasonal variations in cash flows. Second, operational risk—the Company must ensure the complex maintains a 95% availability rate and remains ready to supply electricity to the national grid. This risk is mitigated by General Electric, the O&M operator, which brings extensive experience in both international and local markets. The Company has adequate insurance coverage. Further The Government of Pakistan has provided a sovereign guarantee against dues from CPPA-G.
During CY24, HEPL generated 124.5GWh of electricity (CY23: 167.4GWh), including 51.9GWhof NPMV (CY23: 52.2GWh). The decline was primarily driven by lower wind speeds and curtailment from the power purchaser. Consequently, revenues fell to PKR 4,794mln (CY23: PKR 6,281mln), marking a 24% year-over-year (YoY) decrease, in line with the 26% YoY drop in electricity generation. While electricity generation in CY24 remained below the benchmark level, it was still sufficient to comfortably service the Company’s debt repayments and operational expenses. However, a continuous downward trend in electricity generation has been observed, which, if sustained, could potentially impact the Company’s financial profile. Free cash flow from operations stood at PKR 3,520mln for CY24 (CY23: PKR 4,945mln), while outstanding receivables stood at PKR 2,223mln (CY23: PKR 3,727mln). The Company efficiently manages its working capital requirements through internal cash generation without relying on external debt financing. However, it has secured banking lines that can be utilized if needed. HEPL continues to meet its repayment obligations on its project debt of USD 95.3mln, which is fully financed by the US International Development Finance Corporation (DFC). Notably, the Company has successfully repaid approximately 55% of its long-term project debt, contributing positively to its financial risk profile.

Key Rating Drivers

Upholding operational performance in line with agreed levels, along with factors such as the receipt pattern from the power purchaser, debt repayment behavior, and liquidity cushion, remains critical to hold the ratings. Additionally, any changes in the regulatory environment could potentially impact the ratings, going forward.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Hawa Energy (Pvt.) Limited

rating analysis

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Profile
Plant

Hawa Energy Private Limited (HEPL or the Company) operates a 49.735MW Wind Power Plant located in Jhimpir, District Thatta, Sindh. The project was initiated in 2012 with the plant achieving its Commercial Operations Date (COD) in March 2018.


Tariff

As per the agreement signed with National Electric Power Regulatory Authority (NEPRA), the Company is allowed to charge a tariff of PKR 36.0453/kWh for the quarter Jan- March 2025 subject to applicable indexations and adjustments as per NEPRA Tariff determination.


Return on Project

The IRR of the project as agreed with NEPRA is 17%.


Ownership
Ownership Structure

HEPL is a wholly owned subsidiary of Hawa Holdings Limited, a company incorporated in British Virgin Islands. Hawa Holdings Ltd is in return owned by Hawa Investments Ltd (14%), EMA Power Investments (35%) and Indus Power Ltd (51%). Hawa Investments Ltd (BVI) is 100% owned by Mr. Bruno C. Bucari while EMA Power Investments (UAE) is owned by two international companies namely DL Energy (49%) and Asma Capital (51%). Indus Power Ltd (BVI) is 100% owned by JCM Power through its international holding companies.


Stability

International corporate sponsors having global presence in areas of renewable energy and asset management provide stability.


Business Acumen

Both DL Energy and JCM Power have a proven history of implementing power projects globally. DL Energy has previously been involved in the ownership and construction of 50MW Wind Power projects operating in Pakistan. JCM Power has previously been involved in the construction and development of renewable projects in Asia and Africa.


Financial Strength

The financial strength of the sponsors is considered strong with their global presence.


Governance
Board Structure

Board of Directors comprises of seven members from the sponsoring companies (4 Indus Power Ltd, 2 EMA Power Investments Ltd, 1 Hawa Investments Ltd). Furthermore, the board has formed 3 sub committees including Audit, Operations and HR to engage and oversee the management decisions.


Members’ Profile

The board consists of members from different backgrounds including Engineering, Finance and Investments, Banking, Law and Business Management. The Chairman, Mr. Muhammed Ali an Engineer, has over a decade of experience in the Energy Sector with exposure to key developments in the renewable energy industry. Similarly, remaining members bring vast experience and prerequisite qualifications to be on the board.


Board Effectiveness

The board conducts regular meetings with the presence of all members to discuss the matters relating to the plant and company’s operations. Proper minutes of the board meetings are maintained covering the detailed discussion during the meetings.


Financial Transparency

The company maintains proper financials for each period. The auditors of the company, A. F. Ferguson & Co Chartered Accountants have expressed an unqualified opinion on the financial statements for the year ended December 2023. Audit of CY 2024 is in process.


Management
Organizational Structure

HEPL has an integrated organizational structure that is segregated into 2 broad departments: (i) Finance, (ii) Site Operations. The finance division is responsible for billing, taxation, treasury, invoices, compliance, financial planning and analysis, audit and reporting. On the other side, the operations division is headed by General Manager Operations who oversees matters relating to the plant site.


Management Team

Each of the individuals carry adequate and relevant experience. The CEO is Mr. Muhammed Ali who has previous experience of working in the renewable energy sector.


Effectiveness

The CEO involved in day-to-day operations and spearheads the senior management of the Company at all levels. Daily/Weekly/ monthly meetings are conducted between the CEO and relative Head of Departments. The agenda of the meeting includes strategic matters and matters related to ongoing projects (financial & operations).


Control Environment

The management is supported by a team of individuals from the sponsors who provide global support. Under the senior management, the company has appointed different individuals for each role. The company has well organized finance division while the O&M of the plant is outsourced. The operation site team ensures safety of the site along with monitoring O&M contractor in order to minimize any risk that could potentially damage the plants performance.


Operational Risk
Power Purchase Agreement

HEPL operates under the Renewable Energy Policy 2006. Energy Purchase Agreement is with CPPA-G, and has tenure of 20 years starting from the COD.



Operation and Maintenance

The Company has signed an agreement with General Electric International Inc (G.E) for the Operation and Maintenance Services in relation to their Wind Power Plant valid till March 2028. General Electric has a significant presence globally, and possesses requisite experience to carry out O&M activities effectively.


Resource Risk

Wind risk as defined under Renewable Energy RE policy 2006 is the risk of variability of wind speed, and therefore of the effective energy output of the wind IPP. As per the EPA, HEPL shall be responsible for the delivery of energy.


Insurance Cover

Insurance is attained for material damage, third party liability, terrorism and business interruptions affecting the profits. O&M contractors will be liable to pay Liquidated Damages (LDs) as per the contract if benchmark availability is not achieved.


Performance Risk
Industry Dynamics

The country’s total installed power generation capacity was recorded at ~45,888MW in FY24, up ~0.3% YoY (FY23: ~45,738MW), while the actual power generation was recorded at ~15,662MW, down ~0.6% YoY. This capacity is distributed among various energy sources, with hydel accounting for 23%, thermal 56%, nuclear 8%, renewale 6%, this makes up 93% produced through CPPA-G and 7 percent through KE. In order to balance the energy mix and to reduce dependence on imported energy, Govt. emphasize the transition towards utilizing renewable energy sources and indigenous fuels. As of FY24, thirty-six (~36) wind power projects of ~1,790MW cumulative capacity have achieved Commercial Operation and are supplying electricity to the National Grid


Generation

During CY24 the plant generated Net Electrical Output of 93.2 GWh (CY23: 115.8 GWh). The total energy delivered by the plant is dependent on the electricity demand from the power purchaser and availability of desired wind speed. The efficiency of the plant variated then the required benchmark of 35%.


Performance Benchmark

The plants availability and efficiency during the year has required benchmarks of 95% and 35% as per EPA. HEPL successfully maintained the availability benchmark. However, efficiency remained low due to reduced wind speeds, leading to lower revenue.


Financial Risk
Financing Structure Analysis

Debt financing constitutes 75% of the project cost of USD 127.1mln. The company has obtained 100% Foreign Debt Financing from DFC amounting to USD 95.3mln priced at 3MLIBOR plus 4.0% per annum with the maturity of 10 years with semi-annual repayments. Further, the equity portion of the project cost amounts to USD 31.8mln, which is injected through the sponsoring companies.


Liquidity Profile

Circular debt continues to be an issue for companies operating in power sector. Though Wind IPPs don’t need to procure raw material therefore they rely on internal cash flows. HEPL's liquidity profile remains strong, with ample cash available on its balance sheet.


Working Capital Financing

Renewable IPPs do not have to pay for fuel which minimizes its working capital needs. HEPL's Net Working Capital Days stood at 215 days for CY24 (CY23: 188 days) which is a function of its receivables days. Receivables from CPPAG stood at PKR 2,222.818 mln for CY24 (CY23: PKR 3,726.732 mln).


Cash Flow Analysis

Net cash generated from operations for CY24 stood at ~PKR 4,124 mln (CY23: PKR 3,166 mln). Interest coverage ratio (EBITDA/Finance Cost) as at CY24 clocked at 3.0x (CY23: 3.5x)


Capitalization

HEPL's leveraging at end Dec 24 stood at 48.6% (CY23: 55.3%). The company has been paying its principal and interest instalments as per their agreement with the financing authority. HEPL has no loans on its balance sheet other than the project-related loan.
 
 

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Hawa Energy (Pvt.) Limited

financial summary

(PKR mln)

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Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Non-Current Assets 17,204 18,646 16,538
2. Investments 0 0 0
3. Related Party Exposure 0 0 0
4. Current Assets 7,857 9,172 7,411
a. Inventories 0 0 0
b. Trade Receivables 2,223 3,727 3,086
5. Total Assets 25,061 27,819 23,949
6. Current Liabilities 587 1,274 651
a. Trade Payables 194 102 244
7. Borrowings 11,899 14,689 13,819
8. Related Party Exposure 0 0 0
9. Non-Current Liabilities 9 4 0
10. Net Assets 12,567 11,850 9,479
11. Shareholders' Equity 12,567 11,850 9,479
B. INCOME STATEMENT
1. Sales 4,794 6,281 3,853
a. Cost of Good Sold (2,294) (2,237) (1,653)
2. Gross Profit 2,500 4,044 2,200
a. Operating Expenses (164) (130) (115)
3. Operating Profit 2,336 3,914 2,085
a. Non Operating Income or (Expense) 261 895 789
4. Profit or (Loss) before Interest and Tax 2,597 4,809 2,875
a. Total Finance Cost (1,320) (1,553) (888)
b. Taxation (88) (81) (39)
6. Net Income Or (Loss) 1,189 3,175 1,947
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 3,520 4,945 4,257
b. Net Cash from Operating Activities before Working Capital Changes 2,537 3,778 3,661
c. Changes in Working Capital 1,587 (612) 173
1. Net Cash provided by Operating Activities 4,124 3,166 3,833
2. Net Cash (Used in) or Available From Investing Activities (3) (17) 207
3. Net Cash (Used in) or Available From Financing Activities (3,865) (1,943) (3,204)
4. Net Cash generated or (Used) during the period 256 1,205 836
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -23.7% 63.0% 13.7%
b. Gross Profit Margin 52.1% 64.4% 57.1%
c. Net Profit Margin 24.8% 50.5% 50.5%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 106.5% 69.0% 115.0%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 9.0% 28.8% 21.8%
2. Working Capital Management
a. Gross Working Capital (Average Days) 226 198 300
b. Net Working Capital (Average Days) 215 188 275
c. Current Ratio (Current Assets / Current Liabilities) 13.4 7.2 11.4
3. Coverages
a. EBITDA / Finance Cost 3.0 3.5 5.3
b. FCFO / Finance Cost+CMLTB+Excess STB 0.9 1.2 1.5
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 5.1 4.2 4.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 48.6% 55.3% 59.3%
b. Interest or Markup Payable (Days) 37.3 45.2 67.5
c. Entity Average Borrowing Rate 9.1% 9.8% 6.0%

Apr-25

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Hawa Energy (Pvt.) Limited

rating scale

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Apr-25

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Hawa Energy (Pvt.) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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  3. Conduct of Business
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