Final PR
The Pakistan Credit Rating Agency Limited

Jhangeer Hanif

Rai Umar Zafar

Applicable Criteria

  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]
  • Correlation between Long-term and Short-term rating (Jun 16) [View]
  • Methodology | Independent Power Producers (IPP) (Jun 16) [View]

Related Research

  • Sector Study | Power Generation (Mar 17) [View]
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PACRA Maintains Entity Ratings of Saif Power Limited
 Rating Type Entity
 Action Maintain
 Long Term A+
 Short Term A1
 Outlook Stable
 Rating Watch -

Saif Power Limited (SPL) runs 225MW Combined Cycle Thermal Power Plant at Sahiwal. The ratings reflect strong business profile of SPL emanating from the demand risk covered under PPA signed between NTDC and the company. The implementation agreement further provides sovereign guarantee for cashflows, given adherence to agreed performance benchmarks. The ratings incorporate low operational risk, a result of established performance credentials of GE - the O&M operator. The company mainly operates on gas after introduction of LNG in the system. The coverages of the company improved amidst declining interest rates (end Sep16 4.5x; end Dec15 3.3x). SPL’s receivables continues to remain dependent on power purchaser – NTDC/CPPA-G – payment behaviour. SPL continues to pay dividend to its shareholders and intends to continue this pattern in future. The company's association with Saif Group provides comfort to the ratings.

Management of receivables amidst rising circular debt will remain critical. Meanwhile, upholding operational performance in line with agreed performance levels would be important.
About the Entity
SPL, established in 2004, is an Independent Power Producer operating under the Power Policy 2002. SPL's plant commenced operations on April 30, 2010. SPL was listed on Pakistan Stock Exchange in December 2014. Saif Holdings Limited, with 51% stake, is the majority shareholder of the company followed by Orastar Limited (21%), and Habib Bank Limited (7%).

SPL has a seven member BoD, including the CEO; all belong to Saif family. Nominees of Saif Group are experienced professionals. Mr. Salim Saifullah Khan chairs the board. The CEO, Mr. Omar Saifullah, has been associated with the company since inception. He is assisted by an experienced team.
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.