August 20, 2021: The Pakistan Credit Rating Agency Limited (PACRA) has maintained ratings of National Transmission & Despatch Company (NTDC) at AA+ for the long term and A1+ for the short term with a stable outlook.
According to the press statement issued by PACRA, the ratings reflect National Transmission and Despatch Company’s (NTDC) ownership structure dominantly owned by the Government of Pakistan (GoP). The company is of strategic importance to Pakistan as being a semi-autonomous power transmission utility.
It is mandated to construct, maintain and operate an integrated network of 220 kV, 500 kV, and above transmission lines and grid stations to evacuate power from an installed generation capacity of over 37,000 MW. NTDC’s low business risk emanates from its leading market position and strong uphold on the transmission system in terms of its technical and business expertise.
Moreover, the company’s operational expenses being part of its tariff determination mechanism reflect positively on the company’s performance and business risk profile. The Company's transmission losses are aligned with the globally accepted parameters and are within the limits allowed by NEPRA.
Ratings also take into account the Company’s moderate financial risk emanating from sizable equity, an adequate capital structure that comprises mainly of foreign loans relent in Pak Rupee to NTDC and borrowing from the local banks.
NTDC has also obtained a financing facility of PKR 6.4bln on its own financial positions. Furthermore, in-house working capital management is reflected by strong internal cash generation and constructive management of circular debt by adjusting its receivables with foreign loans relent to NTDC. The ratings also incorporate NTDC’s strengthened position resulting in the completion of ~30 expansion projects.
Market share is expected to remain strong as NTDC has enhanced its transmission capacity to 55,300MVA by Jun-21. Power evacuation from Neelum Jehlum, Dasu Dam are some of the Company's most significant pipeline projects.
Effective management of upcoming projects, in addition to ERP system implementation, consistency in financial profile and risk matrices remains critical for the ratings. Meanwhile, reconciliation of outstanding adjustments regarding Business Transfer Agreements and sustained competitive positioning are also imperative for ratings.