PACRA Maintains Entity Ratings of Lalpir Power Limited

Lahore, October 01, 2020 (PPI-OT): The ratings reflect the regulated structure of Lalpir Power Limited (Lalpir Power) business; whereby revenues and cash flows are guaranteed by the sovereign government given adherence to agreed operational parameters. A risk of any decrease in efficiency factor against required benchmark would be borne by the Company itself given the fact, Lalpir Power is managing its operations and maintenance (O and M) in-house.

Topline of the company, coupled with capacity utilization has decreased, owing to lower power generation during the period demanded by power purchaser amid to better energy mix. Receivable days has increased during 1HYCY20 owing to the delay in timely receipt of receivables; however, minor recovery in overdue receivables from the Energy Sukuk of PKR200bln is observed and settlement of pending receivables is considered crucial. Lalpir Power has been paying dividend which in times of need is an internal source of liquidity available.

The long term project debt was completely paid off in 2010; thus, company’s debt position mainly reflects current borrowings secured to bridge the working capital requirements and maintenance of projects. Because of the mounting receivables and consequent funding thereof from banking lines, utilization of working capital line remained significant. The management is harnessing internal resources for working capital funding and if need be may be resorting to enhance external lines.

Upholding operational performance in line with agreed performance levels would remain a key rating driver. Meanwhile, despite seeking comfort in take or pay tariff regime, any significant increase in overdue receivables, as a result of rising circular debt, coupled with insufficient available working capital financing, in turn weakening in financial risk profile may negatively impact 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