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The Pakistan Credit Rating Agency Limited

Date
07-Mar-2017
Analysts
Rai Umar Zafar
rai.umar@pacra.com

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

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

Related Research

  • Sector Study | Power Generation (Mar 17)
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PACRA Assigns Entity Ratings to Halmore Power Generation Company Limited
 Rating Type Entity
Current
(07-Mar-2017-)
 Action Initial
 Long Term A
 Short Term A1
 Outlook Stable
 Rating Watch -

Halmore Power Generation Company Limited (HPGCL) runs a 225MW power plant. The company operates in the regulated power sector. It enjoys sovereign guarantee against receivables from power purchaser - NTDC - given adherence to agreed performance benchmarks. The Company's operations and maintenance operator, General Electric International (GE), is a key source of comfort in managing the plant's operations. The Company's financial risk profile is largely dependent on repayment behaviour of the power purchaser. In recent periods, availability of primary fuel was challenging; however operational performance remained healthy. Although energy payments observed improvement, the Company’s cash cycle witnessed a surge on account of delayed capacity payments by CPPA. HPGCL funds its working capital requirements mainly through short term borrowing. The company avails forbearance period while meeting its financial obligations; nevertheless, the repayment behavior has improved.

Upholding operational performance in line with agreed performance levels would remain a key rating driver. Improving repayment behaviour would be ratings positive. Any significant increase in overdue receivables, as a result of rise in circular debt, may impact the ratings.
About the Entity
Halmore Power Generation Company Limited (HPGCL), an Independent Power Producer (IPP) with gross capacity of 225 MW, operating under 2002 power policy, is a combined gas cycle turbine plant with gas as primary and HSD as secondary fuel. The company commenced commercial operations in June 2011. Mian Muhammad Sharif – a non-resident Pakistan business magnate – owns 99.99% shares of the company.

The five-member Board of Directors (BoD), including one executive director, is representative of the sponsoring family. Mr. Zaheer Ahmed is the chief executive officer since Jan17, he has over 26 years of experience in construction, operation and maintenance of power generation and transmission.

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.