PACRA maintains Kohinoor Energy ratings amid PPA amendments

March 26, 2026 (MLN): PACRA has maintained Kohinoor Energy Limited’s long-term rating at AA and short-term rating at A1+ with a stable outlook, showing the company’s strong business profile and solid operational performance.

The ratings are primarily supported by robust demand coverage under its Power Purchase Agreement (PPA) with the Central Power Purchasing Agency (Guarantee) Limited, as well as the plant’s strategic importance in supplying electricity to both the national grid and surrounding industrial areas.

As part of the government’s Independent Power Producer (IPP) renegotiation initiative, Kohinoor Energy agreed to amendments in its PPA under the task force’s proposed tariff restructuring.

The revised PPA introduces a “Hybrid Take-and-Pay” model, reducing the plant’s capacity tariff while extending the contract term by 161 days from June 20, 2027, to November 27, 2027.

Additionally, the company has waived outstanding delayed payment interest up to October 31, 2024, resulting in the clearance of overdue receivables and strengthening the company’s liquidity position.

The power plant’s generation remains dependent on the dispatch instructions from the power purchaser.

During FY25, Kohinoor Energy operated at a 7.01% capacity factor, producing 76,156 MWh of electricity compared to 207,615 MWh (19.06% capacity factor) in the previous financial year.

This decline is primarily attributed to the shift of electricity demand toward lower-cost sources, including hydro, local coal, solar, wind, and biogas, under a cost-effective energy basket strategy by the power purchaser.

Despite the reduced dispatch, Kohinoor Energy continues to meet operational availability and efficiency benchmarks, supported by a technically sound operations and maintenance team, robust systems, and controls.

The company’s leverage stood at 16% as of December 2025, reflecting short-term borrowing only, with sufficient cushion to meet working capital requirements within approved limits.

The company’s long-term debt was fully repaid in June 2008, and its association with the Saigol Group provides additional confidence for stakeholders.

The amended PPA, while offering tariff adjustments, is cushioned by the company’s strong liquidity and sound operational performance, supporting the current ratings.

Looking ahead, ratings remain sensitive to the expiry of the PPA and the future operational strategy of the plant.

Management is actively exploring strategic options, including potential participation in the government’s Competitive Trading Bilateral Contracts Market (CTBCM) framework and diversification avenues to maintain sustainable growth.

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