Press Release

VIS Reaffirms Entity Ratings of Liberty Daharki Power Limited (Formerly TNB Liberty Power Limited)

Karachi, November 29, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Liberty Daharki Power Limited (Formerly TNB Liberty Power Limited) (LDPL) at ‘A+/A-1’ (Single A Plus/A-One). Long-term rating of ‘A+’ denotes good credit quality and adequate protection factors; risk factors may vary with possible changes in the economy. Short-term rating of 'A-1' denotes high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on August 19, 2022.

The assigned ratings take into account low business risk profile of the LDPL underpinned by inking of 25-year long power purchase agreement (PPA) with ‘take or pay’ provision with the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G). Presence of long-term PPA with guaranteed capacity payments mitigates off-take risk as obligations of CPPA-G are backed by sovereign guarantee. Moreover, upholding operational performance in line with agreed performance levels would remain a key rating driver. The ratings incorporate growing profitability during the ongoing year on account of higher revenue emanating from both capacity and energy payments and interest on late payments by power purchaser. Moreover, considerable increase was witnessed in markup income from investment in government bonds and advances to associated concern. The management is projecting improvement in plant efficiency emanating from complex overhaul during 1QCY23.

The company’s PPA term was originally set to expire by September 2026 which is expected by the management to be extended by a couple of years in view of PPA Amendment Agreement signed in CY21 thereby leaving the Company with approximately 5 years of commercial operations remaining. Since the project debt has been paid off and the relevant tariff component in the Capacity Payment has also ceased, any debt servicing of financing will be done from the company’s profit generation. Subsequent to expiry of PPA, the company may experience a paradigm shift in its business risk profile. However, given the scenario of low investments expected in the generation capacity of the power sector within next 5 – 10 years, the Company’s management is confident of continuation of demand for power from its Complex. As regards to observations of external auditors involving going concern and emphasis of matter citations, management believes that adequate mitigants for the observations are in place.

Liquidity risk is considered manageable on account of intermittent payments by the CPPA-G. The company repaid significant amount of interest on long-term sponsor loan during CY22. The ratings incorporate improved leverage indicators on account of lower total borrowings and higher equity base at end-HY23. Going forward, ratings will remain dependent on resolution of gas supply agreement, maintenance of optimal performance levels and retirement of long-term borrowings by end-CY23.

For further information on this rating announcement, please contact Mr. Maimoon Rasheed at 042-35723411 (8008) or the undersigned (Ext. 201) at 021-35311861-70 or email at

Javed Callea

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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