PACRA maintains entity ratings of Pak-Arab Pipeline Co.

May 27, 2019 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained the entity ratings of Pak-Arab Pipeline Company (PAPCO) Limited at ‘AAA’ for long term and ‘A1+’ for short term, with a ‘stable’ outlook forecasted.

The initial rating action for the aforesaid rating was announced on November 23, 2018.

According to a press release issued by PACRA on this occasion, the ratings are a reflection of PAPCO’s distinctive business model driving its strength from a tariff based return model.

“The company's governance derives benefit from its association with PARCO, which also deputes its functionaries (esp. CEO) in PAPCO, with Shell Pakistan Limited nominating the CFO,” said the agency.

Moreover, PACRA has added that the ratings are dependent on the sustained business model and operations. “Strong cash flows backs the decline in topline while enabling relevant coverages to its debt repayments is prerequisite.”