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Lalpir Power Limited cancels plan of converting to coal fired boiler: PACRA

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April 19, 2019 (MLN): Pakistan Credit Rating Agency has maintained entity ratings of Lalpir Power Limited at ‘AA’ for long-term and ‘A1+’ for short-term. The outlook on the assigned ratings is ‘stable’.

The ratings reflect the regulated structure of Lalpir Power Limited (Lalpir Power) business; whereby revenues and cash flows are guaranteed by the sovereign government given adherence to agreed operational parameters.

A risk of any decrease in efficiency factor against required benchmark would be borne by the Company itself given the fact, Lalpir Power is managing its operations and maintenance (O&M) in-house.

The company’s business risk is considered low exhibited by demand risk coverage under Power Purchase Agreement signed between Power purchaser and the company.

Moreover, the Company has cancelled its plan of converting the Lalpir Power plant from oil fired to coal fired boiler, owing to the government policy to restrict use of imported coal on certain projects only.

Upholding operational performance in line with agreed performance levels would remain a key rating driver. Meanwhile, any significant increase in overdue receivables, as a result of rising circular debt, coupled with insufficient available working capital financing, in turn weakening in financial risk profile may negatively impact the ratings.

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Posted on: 2019-04-19T13:25:00+05:00

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