Lahore, April 28, 2022 (PPI-OT): 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). The plant achieved its commercial operations date (COD) in March 2018. The project revenues and cash flows are exposed to wind risk and operational risk. Under the upfront tariff regime, any variability in wind speed is to be borne by the Company.
However, historical wind speed patterns provide comfort that HEPL would be able to produce electricity to generate sufficient cash flows. Operational Risk is concerned with the plants availability and efficiency as per the benchmarks agreed in the Energy Purchase Agreement (EPA). Comfort is drawn from General Electric International Inc. (G.E) appointed as the Operations and Maintenance (O and M) operator having both local and international experience in the energy sector. CPPA-G has entered in an agreement with HEPL as the power purchaser for a tenure of 20 years starting from the COD.
The Government of Pakistan has provided a sovereign guarantee against dues from CPPA-G. The working capital requirements are fulfilled through in-house adequate cash flow generation. Net cash from operating activities of the Company stood at ~PKR 1,735mln for the nine-month period ended on Sept’2021 (CY20: ~PKR 1,028mln). HEPL is successfully making repayments against its project debt (USD 95.3mln) that is entirely obtained from US International Development Finance Corporation (DFC). The company has successfully repaid approximately 31% of its long-term debt. Operational needs are met through internal cash. However, the financial risk profile of the company is subject to any dividend pay out commitment and short-term borrowings undertaken by the company in future.
Upholding operational performance in line with agreed performance levels is important. Receipt pattern from power purchaser, debt repayment behaviour and liquidity cushion would impact the directions of ratings. External factors such as any adverse changes in the regulatory framework and weakening of financial profile may impact negatively.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com