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PACRA Assigns Initial Rating to Lucky Electric Power Company Limited – PPCP – PKR 6 billion – May-22

Lahore, September 06, 2022 (PPI-OT):Lucky Electric Power Company Limited (Lucky Electric or The Company) has set up a 1x660MW (gross) coal fired power plant. The project achieved COD in March-22 and is successfully connected to and providing electricity to the grid. The primary fuel is Coal; a coal supply agreement is signed with Sindh Engro Coal Mining Company (SECMC), SECMC will provide the coal from its developing Block-II (Phase III). The Company has also signed imported coal supply agreement with reputable coal suppliers.

Currently, plant is generating electricity through imported coal. Comfort is drawn from the experience of O and M contractor – KEPCO. Going forward, the Company’s main focus would be to keep the plant operational. The Company has procured short term financing facilities aggregating to PKR 33bln for the operational needs. The financial strength and experience in the energy chain of the sponsoring company – Lucky Cement is considered to be positive for the ratings.

Further the sponsor has given explicit assurance to provide sufficient liquidity support or otherwise fund the Company in such a manner that sufficient funds are available at all time to discharge it’s short term financing obligations as per term of financing agreements. This is key consideration in the assigned ratings. The parent company has defined a financial discipline around that as well. The offtake agreement is with CPPA-G, which will, upon plant’s availability as per contract, provide capacity payments even if no purchase order is placed. The Government of Pakistan has given payment guarantee against dues from CPPA-G.

The management’s ability along with the explicit support from the sponsor to effectively manage operational risks provides comfort to assigned ratings. Trend in operational profitability would bode well for rating. External factors such as any adverse changes in the regulatory framework may impact the ratings.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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pacra-assigns-initial-rating-to-lucky-electric-power-company-limited-ppcp-pkr-6-billion-may-22

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