Pakistan Credit Rating Agency Assigns Entity Ratings to Sapphire Electric Company Limited


Lahore: The Pakistan Credit Rating Agency Limited (PACRA) has assigned to Sapphire Electric Company Limited (SECL), a long-term entity rating of “AA-” (Double A Minus) and a short-term entity rating of “A1+” (A One plus). These ratings denote very low expectation of credit risk, emanating from a very strong capacity for timely payment of financial commitments.

The company’s ratings reflect low financial risk owing to stable future cash flows, guaranteed by the Government of Pakistan (GoP) under the Power Purchase Agreement (PPA), the agreement is subject to adherence to certain performance parameters. The ratings incorporate low operational risk emanating from the established operating track record of the O and M operator – General Electric. Meanwhile, weak financial discipline on part of SECL’s sole customer, National Transmission and Despatch Company (NTDC), is expected to remain a key concern. A relatively low-tariff structure for the natural-gas-based plant is expected to help SECL in getting priority payments from NTDC.

The ratings are dependent upon the company’s ability to adhere to agreed performance parameters as established by the power purchaser. The company is currently facing a shortage in the supply of its primary fuel, prolonged delay of which may cause the gas based plant to run on High Speed Diesel, consequently hampering its effective utilization. Furthermore, external factors such as any adverse changes in the regulatory framework may impact the ratings.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1,
Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com