VIS maintains FFBL Power Company Limited's rating

September 13, 2019 (MLN): VIS Credit Rating Company Limited has assigned entity ratings of ‘AA-/A-1’ to FFBL Power Company Limited (FPCL), while the outlook forecasted on the ratings is ‘stable’.

As per an official press release by the agency on this occasion, the ratings reflect account moderate business risk, strong financial risk profile, sound corporate governance infrastructure of FPCL and track record of compliance with normative parameters stipulated in PPA since commencement of operations. Plant availability has remained around 89% during 2018 and 1HCY19 while capacity utilization of electricity has remained in excess of over 100% during the review period.

According to the rating agency, business risk profile draws support from experience profile of in-house O&M team and limited Fuel Supply and Price Risk due to long-term supply contract and cost pass through mechanism built in the tariff. Despite take and pay arrangement, demand Risk has been assessed to be limited due to relatively high position in KE’s merit order along with dispatch guarantees from KE and firm commitment for off-take from FFBL.

In the meantime, liquidity profile of the company remains strong on the back of healthy cash flows, sound debt coverage metrics and timely collection of receivables which is in contrast to most IPPs. Despite sizeable projected dividend payout, capitalization indicators are expected to continue to improve over the rating horizon due to debt repayments and growth in equity base.

Furthermore, FPCL’s 118 Megawatt (MW) (Net Capacity: 103 MW) coal based power plant is amongst the first coal based projects to be operational in Pakistan and is located within the FFBL complex at Port Qasim. It contributes a sizeable portion of its generating capacity to national grid via KE.

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