Press Release

VIS Assigns Initial Ratings to Lakeside Energy Limited (LEL)

Karachi, August 17, 2023: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) to Lakeside Energy Limited (LEL). The medium to long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in economy. Short term rating of ‘A-2’ indicates good certainty of timely payment supported by sound liquidity and company fundamentals. Access to capital market is good and risk factors are small. Outlook on the assigned ratings is ‘Stable’.
Lakeside Energy Limited (LEL or “the project”) is a 50MW wind power plant located in Deh Kohistan, District Thatta, Sindh. The company entered into an Energy Purchase Agreement (EPA) on November 11, 2019 entailing ‘take or pay’ provision with Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) for a period of twenty-five years. Financial close was achieved on Nov 18, 2019 while the project achieved commercial operations date (COD) on Apr 14, 2022. The company signed implementation agreement (IA) with Government of Pakistan (GoP), represented through Alternative Energy Development Board (AEDB) on Nov12, 2019. Engineering, Procurement and Construction (EPC) contract has been signed with Hydrochina International Engineering Company Limited (HIECL) as onshore construction contractor and Hangzhou Huachen Electrical Power Control Co. Limited (HHEPCCL) as offshore supplier. HIECL is also the Operations & Management (O&M) contractor for the initial warranty period of 2 years after COD while the company has entered into long-term O&M contract with Orient Energy Systems (Private) Limited (OES) and Siemens Gamesa Renewable Energy (Private) Limited (SGRE).
The wind power projects (WPPs) have been facing curtailments primarily on account of capacity constraints at national grid level amidst availability of cheaper alternative power sources and the requirement to maintain a base load. Therefore, LEL was unable to meet the annualized targeted capacity factor after coming online. In addition, during FY23, the company could not sustain adequate margins owing to multiple bouts of local currency depreciation against a significantly lower reference tariff. This, along with augmentation in finance cost led to net losses in FY23. The project company has filed for determination of true-up tariff with National Electric Power Regulatory Authority (NEPRA), and expects it to be finalized in a year time. Meanwhile, NEPRA has recently allowed interim relief for indexation adjustments in tariff, which will support profitability profile of the company till finalization of true-up tariff. The liquidity profile is supported by timely recovery of receivables from CPPA-G. Trade debts are secured by a guarantee from the GoP under the IA. The quarterly repayments of financing facilities have been commenced from Sep’22. The cash flows have remained under pressure as a result of weakening in profitability profile. However, comfort is drawn as the company has maintained a standby letter of credit (SBLC) equal to two quarterly installments for the entire loan term as per financing agreements. The project was financed through debt-to-equity ratio of 80:20. Moreover, as the equity base has eroded due to losses, gearing and debt leverage have remained elevated by end-FY23. Going forward, leverage indicators are expected to improve steadily over time on account of repayments of long-term loans and growth in equity base backed by enhanced internal capital generation. The ratings are dependent upon timely resolution of the true-up tariff and availability of timely interim relief from NEPRA to support the financial risk profile of the company.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8001) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at

Sara Ahmed

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

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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .