Lucky Electric signs coal supply agreement with Sindh Engro Coal Mining Co.

April 12, 2022 (MLN): Lucky Electric Power Company Limited (Lucky Electric) has signed a coal supply agreement with Sindh Engro Coal Mining Company (SECM) for its 1x660MW (gross) coal fired power plant which achieved COD in March-22 and is successfully connected to and providing electricity to the grid, a press statement issued by Pakistan Credit Rating Agency (PACRA) showed.

SECMC will provide the coal from its developing Block-II (Phase III). Lucky Electric has also signed imported coal supply agreement with reputable coal suppliers.

Currently, plant is generating electricity through imported coal. Comfort is drawn from the experience of O&M contractor – KEPCO.

Going forward, the company’s main focus would be to keep the plant operational. The Company has procured short-term term financing facilities aggregating to Rs26bln for the operational needs. The financial strength and experience in the energy chain of the sponsoring company – Lucky Cement is considered to be positive for the ratings.

Further the sponsor has given explicit assurance to provide sufficient liquidity support or otherwise fund the Company in such a manner that sufficient funds are available at all time to discharge its short-term financing obligations as per term of financing agreements.

As a result, the rating agency has upgraded company’s rating at AA for long-term and AA- for short-term. The outlook of the company remained stable.

The management’s ability along with the explicit support from the sponsor to effectively manage operational risks provides comfort to assigned ratings. Trend in operational profitability would bode well for rating.

External factors such as any adverse changes in the regulatory framework may impact the ratings.

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Posted on: 2022-04-12T11:38:30+05:00

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