Lahore, September 14, 2020 (PPI-OT): The rating incorporates successful commissioning of the plant, achieved on 14th October 2017. The company opted for the 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 generation that exceeded the required benchmark by 2% in FY20. The company has signed the Energy Purchase Agreement with Central Power Purchasing Agency (CPPA-G) for a period of 25 years.
The company has signed an O and M contract with OMS (Pvt.) Limited for a period of three years. Going forward, the management may extend the O and M contract or move this function in-house. The Government of Pakistan has provided a sovereign guarantee against dues from CPPA-G. The Company has increased short term credit lines to PKR 325 mln previously held at PKR 100 mln that has taken the credit limit in a comfortable zone. Out of available limit~52% remains unavailed. Current borrowings mainly short-term reflect the need to bridge the working capital requirements and maintenance of projects.
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. The 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 cash flows.
The total outstanding foreign and local debt of Harappa Solar stood at ~ USD 6.57 mln and ~PKR 747mln respectively. The company has repaid 25% of total project related debt i.e. ten installments out of total 40 installments by which the debt equity ratios comes to 66% (2019: 70%). Further the government through issuance of Sukuk made payments to IPPs, the company has received ~300 mln from CPPA-G that positively impacted the cashflows of the company. Upgrading operational performance in line with agreed performance levels is important. Improvement in inflows and availability of unutilized credit limit remained congenial for 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
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