VIS Credit Rating Company Limited has maintained the entity ratings of Engro Powergen Qadirpur Limited (EPQL) at ‘AA-/A-1’, signifying high credit quality with low business risk, according to a press release. Â
While the long-term rating of ‘AA-’ indicates a strong capacity for timely debt repayment, the short-term rating of ‘A-1’ highlights the company’s ability to meet short-term obligations with strong liquidity. The outlook on these ratings has been revised from ‘Positive’ to ‘Stable,’ as announced by VIS on September 4, 2024.Â
EPQL operates a 226.52 MW combined cycle power plant and commenced commercial operations in 2010. It supplies electricity to the national grid under a 25-year Power Purchase Agreement (PPA) signed with the Central Power Purchasing Agency-Guaranteed (CPPA-G). The plant converts low BTU, high-sulfur gas into electricity under the Power Policy of 2002. EPQL is 68.9% owned by Engro Energy Limited, a subsidiary of Engro Corporation.
The assigned ratings reflect the low business risk due to the long-term PPA, which ensures stable revenue streams for EPQL. The company’s risk profile is also reinforced by its Implementation Agreement with the Government of Pakistan, guaranteeing capacity payments and reducing credit risks.Â
The stability in ratings is further supported by tariff indexations and hedges against macroeconomic variables such as inflation and currency exchange rates.Â
VIS noted that EPQL’s liquidity is backed by structured cash conversion and sovereign guarantees on receivables, ensuring that coverage remains sufficient despite occasional delays in payments. However, EPQL’s future ratings will depend on its ability to manage fluctuations in fuel supply and any significant regulatory changes affecting the energy sector.
EPQL’s ratings will continue to be monitored in light of macroeconomic factors and changes to its operational environment, with further reviews expected upon completion of ongoing developments.
