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PACRA Maintained the Rating of WAPDA Dasu Sukuk-B – PKR 6,352.94 Million

Lahore, November 24, 2022 (PPI-OT):The Water and Power Development Authority of Pakistan (“WAPDA”) has issued the second tranche of sukuk on 29-Jul-21. WAPDA utilized this amount to partially finance the construction of the Dasu hydropower project (“The project” or “Dasu”). Dasu, once completed would become the second-largest hydel project in Pakistan. Dasu is a run of river project on the Indus river located in Dasu Kohistan, Khyber Pakhtunkhwa about 350 KM from Islamabad.

The project started in 2017 and is expected to be completed in May’27. The project is expected to be completed in two stages, the installed capacity would be 4,320MW (stage-I 2,160MW) and the annual energy which would be produced is 21,485 GWh (Stage-I 12,220 GWh). Stage -I project includes the construction of a hydraulic structure on the Indus River and underground power generation facilities, out of the total land required (5005 acres) for the project 4630 acres have been acquired. The Project would be financed through a mix of WAPDA internally generated cash (15%) and borrowing (85%) i) Long-term (local and foreign) ii) Bonds Issuance (Islamic and Conventional).

The assigned rating of sukuk incorporates an unconditional and irrevocable guarantee by the Government of Pakistan (GoP). The guarantee is covering the payment of the total outstanding amount of the sukuk and the related profit component. GoP would pay the entire called amount immediately upon receiving a demand notice from the issue agent. Additionally, WAPDA has maintained a debt payment account (DPA) under the exclusive lien of the issue agent.

Within the first fifteen days of each month commencing from the Musharaka Contribution Date (as defined in the Musharaka Agreement dated March 29, 2017), WAPDA is depositing an amount equal to 1/6th of the upcoming installment in the DPA. The rating apart from a debt payment and guarantee mechanism recognizes WAPDA’s strategic importance as the major hydroelectric power supplier to the country. WAPDA generated 32,073GWh electricity in FY21. WAPDA expects to generate an additional ~8,070MW by the completion of new hydel projects in the next four years.

WAPDA’s financial profile draws comfort from strong cash flows. However, it remains dependent on the repayment behaviour of the power purchaser. Continued compliance with the predefined covenants of sukuks, including maintenance of DPA would remain critical.

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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