Press Release

VIS Credit Rating Company Reaffirms Entity Ratings of NASDA Green Energy Limited

Karachi, February 08, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of NASDA Green Energy Limited (NGEL or the Company) at ‘A-/A-2’ (Single A Minus/A-Two). Long-term rating of ‘A-’ indicates good credit quality; adequate protection factors. Risk factors may vary with possible changes in the economy. Short-term rating of ‘A-2’ denotes good certainty of timely payment; sound liquidity factors and company fundamentals. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. Last rating action was announced on December 4, 2020.

The assigned ratings incorporate sound financial profile of sponsor, given shareholding being vested with sponsors of Soorty Enterprises (Private) Limited. NGEL is a wind power project with an estimated cost of USD 63.9m, which is being financed in debt to equity ratio of 80:20, where debt component constitutes an approximately equal (51:49) mix of local and foreign lenders. Around 85% of the cost of the project had been incurred as at November’21. The Commercial Operations Date (COD) is expected in early-Q2’2022 (initial date was December’21). So far, there has been delay mainly due to pandemic related issues in import of machinery and equipment. As per management, despite the delays, no or immaterial overheads & finance cost overrun has been noted as the disbursements from lenders were delayed accordingly. The commencement on the expected COD date is important to achieve, VIS will continue to monitor the progress on an ongoing basis.
Business risk profile draws support from Operations & Maintenance (O&M) contract in place with experienced O&M operator. Presence of long-term EPA with lower tariff providing competitive position in the economic merit order mitigates off-take risk. Insurance coverages are in place for the construction period and for the first year of operations.
Assessment of financial risk profile take into account sound projected debt coverage metrics; however, inconsistent payment cycle exhibited by CPPA may translate into some liquidity pressures. Moreover, to facilitate timely debt servicing, the Company has provided a 6-month SBLC to lenders to ensure timely repayment. The assigned ratings incorporate elevated leverage indicators in line with project funding mix. Leverage indicators are expected to improve over time owing to debt repayments and internal capital generation and are captured in the assigned ratings.
For further information on this rating announcement, please contact Mr. Arsal Ayub, CFA or the undersigned (Ext. 201) at 021-35311861-70 or email at .

Javed Callea

VIS Entity Rating Criteria: Corporates (August, 2021)

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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .