Press Release

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

Karachi, September 23, 2024: Credit Rating Company Limited (‘VIS’) has upgraded the entity ratings of Quaid-e-Azam Thermal Power (Private) Limited (‘QATPL’ or ‘the Company’) at 'AA+/A-1+' (‘Double A plus/A-One plus’) from ‘AA/A-1’ (Double A/A-One). Medium to long term rating of 'AA+' indicates High credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short-term rating of 'A-1+' suggests Strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous ratings action was announced on August 23, 2023.

QATPL, wholly owned by the Government of Punjab (‘GoPb’), operates a 1,163 MW (net) RLNG-based Combined Cycle Gas Turbine (‘CCGT’) power plant located in Bhikki, District Sheikhupura, Punjab. The Power Purchase Agreement (PPA) ensures capacity payments continue during non-supply periods. Furthermore, the PPA's "Suspension" clause allows QATPL to halt operations if receivables from Central Power Purchase Agency (Guarantee) Limited (‘CPP’A) remain outstanding for 60 days or more, while still receiving capacity payments. The Commercial Operation Date (‘COD’) was achieved on May 20, 2018, and the final tariff was determined by NEPRA on January 3, 2023. QATPL has a 12-year O&M contract (excluding gas turbines) with a joint venture between Harbin Electric International Company Limited and Habib Rafiq (Pvt) Ltd, with the next scheduled maintenance in FY25. Additionally, a 12-year LTSA is in place with General Electric International Company, Inc. (GE) for gas turbine maintenance.

Assigned ratings incorporate the long-term Power Purchase Agreement (PPA) between QATPL and Central Power Purchasing Agency (Guarantee) Limited (CPPA-G). The agreement, backed by the Government of Pakistan (GoP) through the Implementation Agreement, provides a structured framework for power generation and sale. The agreement also mitigates risks associated with gas non-supply by ensuring continued capacity payments during such events, reinforcing the stability of the Company's revenue stream. Additionally, the right to suspend supply to CPPA in case of prolonged receivable delays further strengthens the Company's position in managing its financial obligations.

Assigned ratings also consider the comprehensive Gas Supply Agreement (GSA) with Sui Northern Gas Pipeline Limited (SNGPL), which secures the supply of RLNG for a period of 15 years from the Commercial Operations Date (COD). This agreement, along with the pass-through mechanism for fuel price variations, effectively mitigates gas supply and price risks. Financial performance indicators highlight a stable profitability profile, supported by consistent gross margins and interest income from delayed payments. The Company's capitalization profile is considered conservative and has been sustained by continuous equity expansion and timely debt repayment. The debt service coverage is maintained at comfortable levels and is supported by indexation adjustments under NEPRA's final COD tariff determination.

For further information on this ratings announcement, please contact on 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

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