Lahore, November 06, 2020 (PPI-OT): Habibullah Power’s Gas Supply Agreement (GSA) with Sui Southern Gas Company Limited (SSGCL), expired in Sep 2019. The company applied for renewal of GSA in Mar 2018. The company is in negotiation with SSGCL for finalization of GSA. In 2019 Economic Coordination Committee (ECC) has approved the proposal by power division for supply of gas to plant for interim period of 3 to 6 months which was further extended by CPPAG only for the period of 12 months. Due to non-availability of gas, company’s generation during the period was zero.
The Company enjoys significant strategic advantage due to its location. There is no other power generation facility in the close vicinity of Quetta which makes HCPC Power Plant a must run facility for stability of national grid and power security of Quetta City. The company’s project debt has been paid and it only borrows to meet its short term needs or for BMR purposes. Consequently, the Company continues to enjoy sound coverages, underpinned by leveraged structure. The company has sizeable liquidity available (cash and cash equivalents PKR ~1,465mln).
There is uncertainty as to the timely finalization of GSA with SSGCL. The ratings have a developing outlook and are placed on rating watch. PACRA would review the ratings once these agreements are finalized. The management is confident based on rational argument as to the finalization of GSA and continued operations of the Company.
Comfort can be drawn from Company’s low leveraged balance sheet, favourable delta between WAPDA receivables/payable and management’s action to refurbish/revamp the machinery so generation will be according to the benchmarks as set by the NEPRA once GSA is renewed. Although well-managed, in-house O and M activities expose the company to operational risk; thus upholding strong operational performance in line with agreed performance levels would remain a key driver of the ratings.
For more information, contact:
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
The post PACRA Maintains Entity Ratings of Habibullah Coastal Power Company (Private) Limited appeared first on Business News Pakistan.