Press Release

VIS Reaffirms Entity Ratings of Liberty Daharki Power Limited

Karachi, February 24, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Liberty Daharki Power Limited (LDPL or the Company) at A+/A1 (Single A Plus/ A One). Medium to long term rating of ‘A+' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A1' suggests strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned ratings remains Stable. Previous ratings action was announced on November 29, 2023.

LDPL was established in Pakistan on August 21, 1995, as a public limited company. The Company’s name was changed to Liberty Daharki Power Limited from TNB Liberty Power Limited on November 4, 2022. The registered office is located in Islamabad. LDPL is primarily engaged in the operation, and maintenance of a combined cycle power station. This power station, with an installed capacity of 235 MW, is developed in two phases in District Ghotki, Sindh. The electricity generated is sold to the Central Power Purchasing Agency Guarantee Limited (CPPA-G).

Assigned ratings incorporate the business risk profile of the Company, which reflects the medium to low industry risk of Pakistan’s non-renewable power production sector. Demand for electricity is stable across various sectors due to its essential nature, supported by urbanization and population growth. The regulated framework under NEPRA ensures oversight of tariffs, licensing, and compliance, significantly influencing operational dynamics and profitability. Additionally, the sector’s capital-intensive nature and the presence of established players create barriers to entry, maintaining market stability. The ratings further factor in the Company’s low business risk profile, supported by the Purchase Power Agreement (PPA) with CPPA-G. The PPA, featuring a 'take or pay' clause, reduces off-take risks, while the sovereign guarantee backing CPPA-G’s obligations ensures stability. The initial PPA was set to expire in 2026. During the year, LDPL entered in PPA Amendment Agreement 2024 which was set to expiry in March 2028. The delay in the Gas Supply Agreement (GSA) finalization is noted, although the assurance of gas supply for the PPA duration supports the operational profile.

Assigned ratings also consider the financial risk profile of the Company, which includes revenue derived from a two-tier tariff structure, capacity payments, and margins that are influenced by the quantity of tier 2 dispatches. The Company’s investment in other operations broadens its sources of cash flows, although the eventual net contribution of these investments remains under observation. Capitalization is maintained with limited obligations, and liquidity is reflected through available resources. The coverage profile is supported by low debt levels and strong revenue flows. Liquidity considerations include the advances extended to related entities, with potential returns expected to materialize in the future.

Going forward, the assigned ratings will be influenced by the continuation or renewal of the PPA, the level of tier 2 energy dispatch, and the net returns from investments. Additionally, any modifications to the PPA and the finalization of the GSA for sustainable gas supply beyond the current PPA's term will be important factors influencing the ratings.

For further information on this ratings announcement, please contact on 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

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 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .