Press Release

VIS Upgrades Entity Rating of Rousch (Pakistan) Power Limited

Lahore, May 22, 2024: VIS Credit Rating Company Limited (VIS) has upgraded the medium to long-term entity rating of Rousch (Pakistan) Power Limited (‘RPPL’ or ‘the Company’) from ‘AA-’ (Double A Minus) to ‘AA’ (Double A) while the short-term rating has been maintained at ‘A-1’ (A-One). The medium to long-term rating of ‘AA’ denotes high credit quality coupled with strong protection factors. Moreover, risk factors may vary slightly with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on May 15, 2023.

RPPL is principally involved in the generation and supply of electricity to the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G) through its combined cycle thermal power plant, having a gross capacity of 450 MW. The assigned ratings incorporate the Company’s robust sponsorship profile which include the Power Management Company (Private) Limited (a part of the Descon Group) as well as international shareholders, namely, Siemens Project Ventures of Germany and the Electric Supply Board of Ireland (ESBI). The ratings also take into account the manageable operational risk in view of the satisfactory Operations and Maintenance (O&M) arrangement in place and adequate insurance coverages. Additionally, demand risk is mitigated through guaranteed payments with CPPA-G in case electricity is not purchased as per the Power Purchase Agreement (PPA); the term of PPA will now end in February 2031. Moreover, the gas fuel supply, which is being managed under an interim arrangement, is expected to be finalized under a long-term GSA.

The ratings also incorporate lower plant availability over the review period due to major outage activities alongside the lack of energy production owing to lower demand from the off-taker and RLNG curtailments. While this has resulted in lower topline, the profitability and margins have improved given higher component of capacity payments in the revenue mix. The Company’s liquidity position is underpinned by periodic payments from the counterparty against trade receivables; moreover, the counterparty risk is considered very low. Cash flows have remained sound. Additionally, the ratings factor in strong capitalization levels owing to absence of debt on the balance sheet. Going forward, the assigned ratings will remain sensitive to improvement in operational performance, clearance of outstanding receivables and finalization of long-term gas supply agreement. Additionally, maintenance of profitability and capitalization metrics as well as internal cash flows will be considered important.

For further information on this ratings announcement, please contact at 042-35723411-13 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

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