Press Release

VIS Reaffirms Entity Ratings of Swat Expressway Planning Construction and Operation (Pvt.) Limited

Karachi, October 06, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Swat Expressway Planning Construction and operations (Private) Limited at ‘A-/A-2’ (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Previous ratings action was announced on August 04, 2022.

SEPCO is a Special Purpose Company (SPC), jointly owned entity of Frontier Works Organization (FWO) and Pakhtunkhwa Highways Authority (PKHA), both having extensive experience in infrastructure development projects, including public-private partnership and Build Operate and Transfer (BOT) mandates. SEPCO was formed for construction of Swat Expressway (SER) on BOT basis. The company entered into a 25-year concession agreement with the PKHA for construction, management, maintenance & operations of the SER on 17th October, 2016.

In the backdrop of devastating floods and all-time high inflation amidst economic slowdown, overall vehicle turnover was reported lower in the outgoing year. Some impact from decline in number of vehicles was offset by yearly upward adjustment in toll rates, as per concession agreement. Overall financial risk profile has been deteriorating since the project has commenced operations, however, the project is passing through a phase where its cash flow are falling behind its annual revenue build up which is normal in long gestation infrastructure projects. This is expected to be normalized in the next few years as envisaged in planning. Moreover, massive hike in markup rates has further dragged the bottomline in the last two years. Hence, liquidity profile has remained stressed due to net losses, impacting debt servicing ability of the company. Nonetheless, presence of sponsor support agreement from FWO to cover debt repayment shortfall provides comfort to the assigned ratings. Moreover, subsequent to the debt re-profiling, around two-third of the debt mix comprises sponsor loans. Ratings remain underpinned on sponsor support agreement and strategic importance of the project.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-12 (Ext. 8005) and/or the undersigned at 021-35311861-64 (Ext. 207) or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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