Press Release

VIS Upgrades Entity Ratings of Indus Wind Energy Limited

Karachi, May 16, 2022: VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of Indus Wind Energy Limited (IWEL) to ‘A/A-2’ (Single A/A-Two) from ‘A-/A-2’ (Single A Minus/A-Two). Long term rating of ‘A’ signifies good credit quality; protection factors are strong. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on March 19, 2021.
IWEL is a 50 MW wind power project and is virtually a wholly owned subsidiary of Indus Dyeing & Manufacturing Company Limited. The ratings incorporate association of the project company with ‘Indus Group’ which comprises of one cotton ginning factory, four yarn spinning mills and one of the largest terry towel factories in Pakistan. The assigned ratings take into account low business risk profile of the company underpinned by inking of 25-year long Energy Purchase Agreement (EPA) with ‘take or pay’ provision with the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G). Presence of long-term EPA with guaranteed capacity payments mitigates off-take risk as obligations of CPPA-G are backed by sovereign guarantee. The company is susceptible to wind risk; however, extensive wind study reflects very low potential risk to the operations. Further, given the energy generation of the company is from a low-cost renewable source, wind, it is expected to remain high on the electricity dispatch merit order. The project is financed through debt to equity mix of 80:20, where debt comprises an equal mix of local and foreign lenders. IWEL has been able to secure local borrowing through SBP concessionary refinancing scheme. EPC contracts are signed with Hydrochina International Engineering Company Limited (HIECL) as onshore construction contractor and with Hangzhou Huachen Electrical Power Control Co. Limited as offshore supplier. HIECL is a subsidiary of ‘PowerChina’, one of the biggest construction group in the power sector with engagement in over 100 countries. HIECL is also the O&M contractor for the initial two years of warranty period while General Electric International Inc. is the long-term O&M contractor. The long-term rating upgrade is underpinned by elimination of construction risk as the project achieved commercial operations on 25th March,2022.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8010) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at .

Javed A. Callea

Applicable rating criterion: Corporates (August 2021)

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