Press Release
VIS Maintains Entity Ratings of National Power Parks Management Company (Private) Limited
Karachi, December 06, 2024: VIS Credit Rating Company Limited (‘VIS’) has maintained the entity ratings of National Power Parks Management Company (Private) Limited (‘NPPMCL’ or ‘the Company’) at 'AA+/A1+' (‘Double A plus/A One Plus’). 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 'A1+' suggests strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned ratings is removed from ‘Rating Watch-Developing’ and revised to ‘Stable’. Previous ratings action was announced on December 28, 2023.
Ratings of the Company are removed from ‘Rating Watch-Developing’ status because the Company is no longer on the privatization list by the Government of Pakistan (GoP).
National Power Parks Management Company (Private) Limited (NPPMCL), established in 2015, owns and operates two combined-cycle gas-fired power plants: Haveli Bahadur Shah in Jhang and Balloki in Kasur. Operating under the Power Generation Policy 2015, the plants benefit from a guaranteed equity IRR, cost indexation, and a pass-through structure. Achieving commercial operations in 2018, NPPMCL is a government-supported entity, wholly owned by the Government of Pakistan (GoP) through Pakistan Development Fund Limited (PDFL), a non-banking financial company.
The assigned ratings reflect NPPMCL’s business risk profile, underpinned by a strong sponsor backing and a solid operational framework. The ratings benefit from the Company’s stable business profile, supported by a long-term Power Purchase Agreement (PPA) with Central Power Purchase Agency (Guarantee) Limited (CPPA) under a ‘take or pay’ arrangement. Operational risks are effectively mitigated through long-term contracts with experienced O&M providers. Government of Pakistan has recently formed a task force to renegotiate power purchase agreements with IPPs and requested data from NPPMCL. The company reports no further development on the matter.
The assigned ratings also incorporate NPPMCL's profitability, supported by tariff indexation and income from delayed payment charges. The Company’s capitalization profile has strengthened, driven by equity growth through profit retention. While the liquidity position faced pressure due to delayed payments from CPPA-G amidst sector-wide circular debt challenges, PDFL has waived immediate repayment demands, allowing NPPMCL to align its settlements with CPPA-G’s fund disbursements. By end-Dec’24, the Company is expected to regularize its debt repayments to PDFL. Low gearing and debt leverage reflect the combined impact of equity growth and gradual debt reduction. The ratings remain sensitive to maintaining sound financial metrics.
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
Government Supported Entities
https://docs.vis.com.pk/docs/Meth-GSEs202007.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf
Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .