Press Release

VIS Reaffirms Ratings of FFBL Power Company Limited

Karachi, October 20, 2020: VIS Credit Rating Company Limited has reaffirmed the entity ratings of to FFBL Power Company Limited (FPCL) at ‘AA-/A-1’ (Double A Minus/A-One). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on September 12, 2019.

Reaffirmation of ratings continues to draw comfort from strong sponsor profile (subsidiary of Fauji Fertilizer Bin Qasim Limited and Fauji Foundation being the ultimate holding company), low business risk and improving financial profile as evident from healthy cash flow coverages and reduction in leverage indicators. Ratings also factor in the FPCL’s demonstrated track record of compliance with performance parameters stipulated in the PPA including plant availability and efficiency. Moreover, improvement in operational performance in terms of higher capacity utilization and increase in heat rate has been noted positively.

Business risk profile draws support from experience profile of in-house O&M team and limited fuel supply and price risk due to long-term supply contract and cost pass through mechanism built in the tariff. Despite take and pay arrangement with KE, demand risk is limited due to low cost of power generation (compared to other existing KE plants which favorably impacts KE’s merit order position) and dispatch guarantees from KE (as built in PPA). Overall liquidity profile remains strong on the back of healthy cash flow generation and sound debt coverage metrics; recent increase in receivables if not arrested may impact free cash flows. Despite healthy dividend payout, capitalization indicators improved on account growth in equity base and reduction in debt levels due to continued debt repayments.

For further information on this rating announcement, please contact the undersigned (Ext: 306) at (021)35311861-70 or Mr. Talha Iqbal (Ext: 213) fax to (021)35311872-3.





Faryal Ahmed Faheem
Deputy CEO

Applicable Rating Criteria:
Oil & Gas Industry (November 2016) http://www.vis.com.pk/docs/Meth-OilGas201611.pdf
Industrial Corporates (May 2016) http://www.vis.com.pk/docs/Corporate-Methodology-201605.pdf

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