Lahore, July 08, 2021 (PPI-OT):The ratings reflect sizable improvement in profile of Engro Elengy Terminal (Private) Limited (EETPL), as captured by growing profitability and declining leverage attributable to scheduled repayments. The revenues and cash flows are guaranteed by Sui-Southern Gas Company (SSGC), subject to adherence to agreed parameters. SSGC, the sole intermediary, has demonstrated timely payments against committed purchases despite challenges.
The business profile of EETPL is strong, emanating from GOP’s commitment to managing energy needs of the country by way of imported LNG. Being the pioneer in the industry and guaranteed off-takes under LSA agreement with SSGC, EETPL poses a significant threat for new entrants in the industry. ETPL has initially planned to increase its capacity to 1000mmcfd however currently installed FSRU has usual capacity of 630mmcfd (peak hours: 680mmcfd).
Thus, a sizable and recurring stream of income is ensured. Another significant factor is the enhanced ownership stake of Vopak LNG Holding B.V. in the Company’s Parent Elengy Terminal Pakistan Limited (44%). Vopak LNG Holding B.V. is an international player with sizable footprint in terminal businesses worldwide which adds strength to the business profile attributable to successful business model of Vopak LNG Holding B.V. of establishing a joint venture with local players. Engro Elengy continues to meet its availability (~95%) – an outcome of technically sound operations and maintenance operator, Excelerate Energy (EE), is a key source of comfort in managing the plant’s operations. A stable stream of revenue leads to build-up of surplus cash, which after making committed payments to lenders is being distributed to sponsors regularly, as per policy.
The working capital cycle is solely the differential of the days of receipts from SSGC and payments to suppliers. Payments from SSGC are secured by way of a Stand-By Letter of Credit (SBLC), due to which chances of deterioration in the Working capital cycle are very low. This keeps working capital needs under check. Company’s total long-term debt of PKR 2,921mln as of end-March21, payable till Dec23. Corporate Guarantee from sponsor group provides further strength to the financial profile of the Company.
The ratings take significant support from EETPL’s association with Engro Corporation Limited and Vopak LNG Holding B.V. The ratings remain dependent on smooth operations of the terminal, and conduct of sole buyer with reference to the timely payments to Engro Elengy Terminal. Meanwhile, debt service coverage and other financial-related metrics must remain strong.
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