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The Pakistan Credit Rating Agency Limited

Date
30-Dec-2016
Analysts
Rai Umar Zafar
rai.umar@pacra.com

Usama Liaquat
usama.liaquat@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

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

Related Research

  • Sector Study | Oil and Gas (Oct 16) [View]
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PACRA Maintains Entity Ratings of Engro Elengy Terminal
 Rating Type Entity
Current
(30-Dec-2016)
 Action Maintain
 Long Term A
 Short Term A1
 Outlook Stable
 Rating Watch -

The ratings reflect sustained operations of Engro Elengy Terminal (Private) Limited (EETPL). At the same time, the business profile of EETPL is strong, emanating from GoP's commitment to mitigate prevailing gas crisis in the country by way of importing LNG. SSGC – the sole intermediary, rated "A+" has demonstrated timely payments against committed purchase despite challenges. Additionally, Stand-by Letter of Credit, covering capacity payments for six months and option to offer LNG to third parties, provide comfort. The ratings also take significant support from EETPL's association with Engro Corp (ECL), that has demonstrated financial strength. The subordinated debt from ECL is being replaced by commercial lending - includes foreign lenders ADB and IFC, which remained adequately covered by EETPL's cashflows.

The ratings remain dependant on the smooth operations of the terminal and conduct of SSGC - with reference to the timely payments to the company. Meanwhile, debt service coverages and other financial related matrics must remain strong.
About the Entity
EETPL is operating the country's first LNG facility being constructed at Port Qasim. The design capacity of the terminal is 600mmcfd. EETPL, a private limited company, is owned by Elengy Terminal Pakistan Limited (ETPL), which is owned by Engro Corporation Limited (80%) and International Finance Corporation (20%). Currently, EETPL is handling ~400mmcfd of LNG and going forward by 1QCY17, it will be enhanced to ~600mmcfd.

The board of EETPL comprises two members including its CEO. The members represent Engro Corporation (ECL). Mr. Syed Mohammad Ali, CEO of EETPL for two years was previously associated with Engro PowerGen Qadirpur Limited as CEO. Mr. Ali holds a bachelor’s degree in Electrical Engineering from UET Lahore. He possesses adequate experience of power and related sectors. He is supported by a team of qualified Professionals.
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.
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