Accumulation of circular debt poses a threat to NCPL’s strong operational performance: PACRA

March 19, 2019: Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Nishat Chunian Power Limited at ‘A+’ for long-term and ‘A1’ for short-term, with a ‘stable’ outlook forecast assigned to the company.

The ratings reflect strong business profile of the company, emanating from the demand risk coverage under Power Purchase Agreement signed between CPPA-G (Central Power Purchasing Agency) and the company.

Meanwhile, the Implementation Agreement provides sovereign guarantee for cash flows, given adherence to agreed performance benchmarks. Nevertheless, delayed payments from the power purchaser remained a challenge.

Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels remain important.

Accumulation of circular debt would pose threat to the company’s ability to continue with this practice. However, the management ably supported by sponsors’ remains committed to sustain improvement in management of commercial obligations and timely debt repayments.

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