Lahore, November 30, 2018 (PPI-OT): Harappa Solar Private Limited (Harappa Solar), 18MWp – Pakistan’s first solar power plant with single axis sun tracking technology was set up under 2006 Renewable Energy Policy. The rating incorporates successful commissioning of the plant, achieved on 14th October 2017. The company opted for upfront tariff. Under the upfront tariff regime, any variability in solar energy is to be borne by the Company, due to which its cash flows may face seasonality.
The rating takes comfort from plant’s latest technology which gives it extra cushion of 2.1 percentage points over required plant factor – 17%, minimizing solar risk. The company has signed Energy Purchase Agreement with Central Power Purchasing Agency (CPPA-G) for a period of 25 years. The company has signed O and M contract with OMS (Pvt.) Limited for a period of three years. Going forward, the management is planning to move O and M function in-house.
The Government of Pakistan has provided a sovereign guarantee against dues from CPPA-G. However, the Company’s ability to manage contracted parameters over multiple solar cycles is yet to be seen. The company has availed both foreign and local loan to finance the debt. Foreign loan, covered through SBLC from local financial institutions, is availed from ECO Trade and Development Bank Turkey.
Local loan is received from The Bank of Punjab, Pak Oman Investment Company and Askari Bank Limited. The company is required to maintain DSRA equivalent to two debt repayments under financing documents; this requirement is being met by SBLC from sponsors. Going forward, the company plans to fund DSRA from internal cashflows. The total outstanding foreign and local debt of Harappa Solar stood at ~ USD 7.7mln and ~PKR 921mln respectively. The company has repaid three installments up to date.
Upholding operational performance in line with agreed performance levels is important. Improving, indeed aligning, build-up of DSRA from internal sources, 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: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com