Good credit term with fuel suppliers enables APL to efficiently manage debt repayments: PACRA

December 28, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Atlas Power Limited at ‘AA-‘ for long-term and ‘A1+’ for short-term, with a ‘stable’ outlook forecast.

According to the rating agency, the ratings of APL reflect its strong financial profile. APL's good credit terms with fuel supplier and efficient inventory management have enabled it better management of debt repayments.

Nevertheless, delayed payments from the power purchaser remained a challenge. Despite higher receivable days the entity managed to sustain its financial strength.

Business risk is considered low exhibited by demand risk coverage under Power Purchase Agreement signed between NTDC and the company.

The implementation agreement further provides a sovereign guarantee for cash flows, given adherence to agreed performance benchmarks.

The ratings incorporate low operational risk, a result of the performance of MAN Diesel Pakistan - the O&M operator.

As per the report, the total outstanding balance of project related debt as at end-July18 is PKR 3,036mln, payable till October 2019.

Additionally, the company has re-profiled its debt (Non-Tariff) where the company has borrowed new long-term debt of PKR 2,000mln at lucrative terms to meet its permanent working capital requirements. Moreover, sound financial profile of Atlas Group; the major sponsor, provides comfort to the ratings.
Adherence to good financial discipline towards both financial and commercial obligations would remain important.

Meanwhile, upholding strong operational performance in line with agreed performance levels remain important.

Any significant increase in overdue receivables, in turn, weakening in financial risk profile would be a concern.

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