Press Release

VIS Upgrades Entity Rating of FFBL Power Company Limited

Karachi, March 27, 2025: VIS Credit Rating Company Limited (VIS) upgrades entity rating of FFBL Power Company Limited (‘FPCL’ or ‘the Company’) from ‘AA-/A1’ (‘Double A Minus/A One) to ‘AA/A1’ (‘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 'A1' indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous Rating action was announced on December 20, 2023.
FPCL operates a 118 MW coal-fired power plant, which became operational on May 19, 2017. The entity is a subsidiary of Fauji Fertilizer Company Limited (FFC), under the umbrella of Fauji Foundation (FF). FPCL’s functions include generating power and steam for FFC’s fertilizer complex at Port Qasim and supplying electricity to K-Electric (KE). The plant is located at Port Qasim, Karachi. Shareholding is held by FFC (75%) and Fauji Foundation (25%).
Assigned ratings take into account the business risk profile of the non-renewable power sector in Pakistan, which is assessed as medium to low. The sector benefits from stable electricity demand, high barriers to entry, and long-term power purchase agreements (PPAs) that mitigate short-term fluctuations. However, regulatory oversight, capital intensity, and financial constraints linked to circular debt remain key risk factors. Nevertheless, the Company is not impacted by the circular debt issue due to its independent PPAs with K-Electric and its parent company. Electricity demand has remained stable, although the underutilization of generation capacity and substitution risk due to the government’s transition toward renewables have introduced competitive pressures. The Company operates under long-term PPAs with its parent and K-Electric, reducing offtake risk. Positioning on K-Electric’s merit list remains a key consideration, with sustained demand from its parent company providing revenue stability. Meanwhile, fuel supply risks have increased following the discontinuation of a long-term coal supply agreement, with procurement now being conducted at spot rates.
Assigned ratings also take into account the financial risk profile of the Company. Revenue increased due to tariff adjustments and demand stability, while gross margins were marginally impacted by delays in fuel cost adjustments. Operating margins improved, supported by insurance claim realizations. Profitability was further supported by reduction in finance costs and income from associate holdings. The Company fully repaid its long-term financial obligations during the period, leading to a lower debt burden and improved capitalization metrics. Liquidity remained adequate and debt service coverage improved due to stronger cash flows and reduced financial obligations. Rating upgrade is supported by the Company's improved financial risk profile.
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

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