Press Release
VIS Reaffirms Entity Ratings of Yunus Energy Limited
Karachi, May 19, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings assigned to Yunus Energy Limited (‘YEL’ or the ‘Company’) at ‘A+/A1’ (Single A Plus/A One). The medium to long-term rating of ‘A+’ reflects good credit quality, protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A1’ indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on July 03, 2024.
YEL operates a 50MW wind power plant comprising 20 Wind Turbine Generators (WTGs) of 2.5MW generation capacity each, located in the Jhimpir-Hyderabad corridor, Sindh. The project was developed at a total cost of USD 110.2 million and was financed through a debt-to-equity ratio of 80:20. The Commercial Operations Date (CoD) was achieved in September 2016. YEL has a 20-year Energy Purchase Agreement (EPA) with Central Power Purchasing Agency (Guarantee) Limited (CPPA-G), dated March 26, 2014. The Engineering, Procurement and Construction (EPC) was carried out on a turnkey basis. Operations and Maintenance (O&M) services are being provided by a consortium comprising NORDEX Pakistan (Private) Limited and Descon Engineering Limited. The O&M arrangement is expected to continue until the full repayment of project debt.
Assigned ratings incorporate the business risk profile of Pakistan’s renewable energy sector, assessed as medium, supported by policy initiatives, rising demand, and natural resource availability. Sector growth is guided by the Alternative and Renewable Energy Policy 2019 and IGCEP 2047, emphasizing diversification through competitive bidding and grid development. Structural risks persist due to regulatory uncertainty, technological changes, and capital intensity. Exposure to substitution risk and variable market dynamics also remain relevant. Revenue visibility is supported by a long-term Energy Purchase Agreement with CPPA-G, backed by sovereign guarantees. Operational risk is mitigated through long-term O&M arrangements with defined availability thresholds, with compensation provisions in case of non-project events and curtailments. Wind resource and seasonal variability remain present but are partially mitigated by site-specific assessments and historical performance. Ratings also incorporate sponsor strength derived from YBG, a diversified business group with operations across multiple sectors.
Assigned ratings also consider the financial risk profile of the Company, including profitability supported by tariff indexation and preceding offtake levels, though impacted by seasonal wind variability and curtailments. Margins reflect the effects of capacity factor fluctuations, with partial mitigation through non-project event compensation under the energy purchase agreement. Capitalization profile indicates a declining leverage trend, driven by retained earnings and scheduled long-term debt repayments. The debt portfolio comprises long-term financing from local financial institutions, with no short-term borrowings in place. Operational needs are met through internal cash flows. Liquidity indicators show some moderation due to dividend disbursements, though supported by short-term investments. Debt coverage remains aligned with tariff provisions, with repayment obligations structured as part of the tariff framework.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf