Press Release

VIS Upgrades Entity Rating of Punjab Thermal Power (Pvt.) Limited

Karachi, September 19, 2023: VIS Credit Rating Company Limited (VIS) has upgraded the medium to long-term entity ratings of Punjab Thermal Power (Pvt.) Limited (‘PTPL’ or ‘the Company’) to ‘AA’ ((Double A) from ‘AA-’ (Double A Minus) while short-term rating has been maintained at ‘A-1’ (A-One). The medium to long-term rating of ‘AA’ denotes high credit quality; protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. 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 rating is ‘Stable’. Previous rating action was announced on June 09, 2022.
The ratings assigned to PTPL incorporate its strong ownership profile being wholly owned by a sub-sovereign, Government of Punjab (GoPb) through Energy Department. PTPL is a combined cycle power project of 1,263.2 MW on Re-gasified Liquefied Natural Gas (RLNG) as the primary fuel and High-Speed Diesel (HSD) as back-up fuel located near Haveli Bahadur Shah/Trimmu Barrage, District Jhang, Punjab, Pakistan. The project was approved by the Cabinet Committee on Energy (CCoE) of the Federal Government in June 2017. PTPL filed application for grant of generation license in July 2017; meanwhile, National Electric Power Regulatory Authority (NEPRA) granted power generation license to PTPL in February 2018. In June 2020, a Power Purchase Agreement (PPA) was signed for a 30-year period with the Central Power Purchasing Agency Guarantee Limited (CPPA-G) entailing 'take or pay' provision. In August 2020, the CCoE approved a reduction in capacity charges for government-owned projects and adjusted the Return on Equity (ROE) to 12%, with dollar-based indexation. Additionally, in August 2020, the Company entered into a Gas Supply Arrangement with Sui Northern Gas Pipeline Limited for a 15-year term. Financial close was achieved in April 2021.
The Company successfully initiated Simple Cycle Operation for Gas Turbine 1 (GT-1) on July 27, 2022, and for Gas Turbine 2 (GT-2) on August 04, 2022. Subsequently, the plant became operational for generation in simple cycle mode, operating on an "as available" basis, with the generation tariff determined by NEPRA on a unit delivered basis. By mid-January 2023, the commissioning of both gas turbines on HSD was successfully accomplished. The revision in ‘medium to long-term’ rating is supported by commencement of Combine Cycle Operations on gas fuel on June 23, 2023. A certification from an Independent Engineer confirmed the successful completion of commissioning tests and the readiness for complex continuous operation and dispatch on gas fuel whereas certification on back-up (HSD) will be issued after completion of certain performance tests related to HSD commissioning. Furthermore, Power Purchaser in pursuance of Economic Coordination Committee (ECC) decision has deferred commissioning test on HSD for a period of 4 months. Post-COD, Energy Purchase Price (EPP) and Capacity Purchase Price (CPP) invoices are being drawn on the Combined Cycle tariff. PTPL ranks highest amongst projects operating on RLNG. The Company's business risk profile is bolstered by a long-term Operations & Maintenance (O&M) contract with an experienced O&M operator. The ratings also draw comfort from government guaranteed cash flow stream under the agreement upon meeting certain performance benchmarks.
For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-64 (Ext. 201) or email at

Sara Ahmed

VIS Entity Rating Criteria: Industrial Corporates (May 2023)
VIS Rating scale

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