Press Release

JCR-VIS assigns Preliminary Rating of A+ to the PPTFCs-2 of Sindh Nooriabad Power Company Phase-II (Pvt.) Limited

Karachi, January 16, 2015: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned ‘Preliminary’ rating of ‘A+’ (Single A Plus) with a ‘Stable’ Outlook to the proposed unsecured Privately Placed Term Finance Certificates-2 (PPTFCs-2) of Sindh Nooriabad Power Company Phase-II (Pvt.) Limited (SNPC-II). The preliminary rating will be converted to a final rating upon review of relevant signed legal documents.

SNPC-II is in the process of setting up a 50 MW power generation project at Nooriabad, Sindh under the provision of National Policy for Power Generation Projects, 2002 for small power projects by provinces. The combined cycle power plant is a Public-Private Partnership scheme with the Government of Sindh (GoS) holding 49% equity stake, which has already been received. The private partner is Technomen Kinetics (Pvt.) Limited (TKL) with a share of 51% in the company. TKL is part of the Technomen group having multi-dimensional business experiences primarily in Engineering, Procurement and Construction (EPC) of power and related projects since 1993.

The project cost is estimated at USD 68.18m with a debt to equity ratio of 80:20. All Letters of Credit (L/Cs) for the project have been opened in favor of Wartsila Finland for the main contract and TKL for ancillary work. The L/Cs will be partially converted into funded facilities while the funding gap is to be covered through the proposed PPTFCs-2. The financial close is expected to be achieved soon. The return on equity is guaranteed at minimum 17% while financial projections provide adequate debt servicing coverage.

The EPC is a hybrid arrangement between Wartsila Pakistan (Pvt.) Limited (Wartsila) and TKL. Wartisila is a reputed supplier of power engines having significant experience in the local market. The delay risk in implementation of the project is adequately covered through performance guarantee provided by Wartsila and a separate insurance cover by a reputable insurer. The commercial operation is expected to be achieved by August, 2015. The GoS is the financial guarantor for default on payments by the power purchaser. The company has signed a Gas Supply Agreement (GSA) with Sui Southern Gas Company Limited. The GSA guarantees the required gas supply to the project while having complete coverage for liquidated damages payable to the power purchaser. The Power Purchase Agreement (PPA) with the power purchaser is in the finalization stage. The Implementation Agreement (IA) with the GoS has been signed.

The board comprises representatives of TKL and GoS. The company and the GoS have appointed two separate independent external auditors having good repute. The GoS has also appointed independent engineers for the project. The project management team comprises seasoned professionals having extensive experience primarily in engineering sector.

For further information on this rating announcement, please contact Ms. Sobia Maqbool (Ext. 604), CFA at 021-35311861-70 or Mr. Maimoon Rasheed (Ext. 805) at 042-36610681-4.

Jamal Abbas Zaidi
Deputy CEO

Applicable Rating Criteria: Rating The Issue (September 2014)

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