Rising circular debt to negatively impact Nishat Power Ltd’s financial position: PACRA

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

Nishat Power Limited (Nishat Power) enjoys sovereign guarantee against receivables from power purchaser - NTDC - given adherence to agreed performance benchmarks, stated a press release issued by the rating agency.

While cost-savings are a likely outcome, it is critical to hold any operational benchmarks to avoid any consequences. The company's financial risk profile is largely dependent on repayment behavior of power purchaser.

In recent period, receivables including delayed payments interest witnessed an increase. Nevertheless, the company has been managing its working capital requirements via short-term borrowings.

“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, may negatively impact the ratings” the report added.

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