July 29, 2019: Pakistan Credit Rating Agency (PACRA) has assigned initial entity ratings to Sindh Engro Coal Mining Company Limited at ‘AA’ for long-term and ‘A1+’ for short-term. The outlook on the assigned ratings is stable.
According to the press release issued by PACRA, the ratings reflect the company’s ownership structure- owned by the Government of Sindh and financially sound business groups of the country.
The rating also incorporates the fact that indigenous coal is expected to play a dominant role in meeting the country's future energy requirement.
The rating favorably factors in successful commissioning of 3.8mln TPA (Phase-I) mine on 10th July 2019, three months earlier than the Scheduled COD. Subsequently, it will be ramped up to 7.6mln TPA in phase II.
Comfort is drawn from China Machinery Engineering Corporation (CMEC) – the O&M operator – having significant experience of International EPC Projects in Power Plants.
Business risk is considered low, exhibited by demand risk coverage as SECMC has signed a Coal Supply Agreement with its associated company, Engro Powergen Thar Limited (EPTL), incorporated to operate mine-mouth coal-fired Power Plant (2x330MW), for phase-I.
Adherence to good financial discipline towards both financial and commercial obligations is considered a strength. Meanwhile, upholding strong operational performance in line with agreed performance levels remain important. Effective management of the project, favorable regulatory regime, and consistency in related policies remain critical for the ratings.
Copyright Mettis Link News