Press Release

VIS Reaffirms Ratings of Quaid-e-Azam Thermal Power (Private) Limited

Karachi, June 30, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Quaid-e-Azam Thermal Power (Private) Limited (QATPL) at ‘AA/A-1’ (Double A/ A-One). The medium to long-term rating of ‘AA’ denotes high credit quality coupled with strong protection factors. Moreover, risk factors may vary slightly with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on May 24, 2021.

QATPL is wholly owned by the Government of Punjab (GoPb). The company owns and operates Re-Liquefied Natural Gas (RLNG) based Combined Cycle Gas Turbine (CCGT) power plant of 1,163 MW generating capacity at Bhikki, District Sheikhupura - Punjab. The ratings draw comfort from the presence of a clause in the Power Purchase Agreement (PPA) whereby QATPL will continue to receive capacity payments during the period of non-supply of gas. In addition, the “Suspension” clause in the PPA allows the company to suspend its plant operations if the receivables due from Central Power Purchase Agency (Guarantee) Limited (CPPA), at any point in time remains outstanding for 60 days or more, while QATPL will continue to receive capacity payments during the suspension period. This provision further protects the company from the circular debt risk. The Cabinet Committee on Energy (CCoE) approved reduction in capacity charges of Government owned projects in Aug’20 and revised the Return on Equity (ROE) from 16% to 12% with dollar-based indexation. Tariff is expected to be finalized in Aug’22.

During FY21 and HY22, net revenues were reported notably higher on account of higher electricity offtake while the gross margins decreased as a result of lower contribution of CPP component in the revenue mix along with revision in ROE. Overall profitability is supported by interest income on delayed payments from CPPA-G. In addition, lower finance cost in FY21 vis-à-vis preceding years also led to considerable increase in net profits. The equity base has expanded on account of profit retention leading to improvement in capitalization indicators on a timeline basis. Debt service coverage is supported by provisional indexation adjustment on reference tariff provided by NEPRA in the form of interim relief. The company would recognize the actual indexation impact on revenue once the true-up decision is made. The assigned ratings are linked to the continuity of the above arrangements with comfortable debt servicing. The ratings incorporate adequate corporate governance framework underpinned by effective board oversight.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 201) or email at

Javed Callea

VIS Entity Rating Criteria: Corporates (August 2021)

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