PACRA Maintains the Entity Ratings of Master Green Energy Limited – Outlook Stable

Lahore, May 25, 2023 (PPI-OT): Master Group, pioneer of foam products in Pakistan, installed its second 50MW wind power plant project in district Jamshoro, Sindh - Master Green Energy Limited (“the Company” or “Master Green”), after the success of its first wind power project. Master Wind Energy Limited located in Jhimpir, Sindh. The Company signed Energy Purchase Agreement ("EPA") with CPPA-G for a period of 25 years. As per the EPA, in case of non-project missed volumes the power purchaser shall be liable to pay the missed volumes at applicable tariff rates.

Master Green was awarded a cost-plus tariff by NEPRA, with the energy payments to be received from CPPA-G backed by the sovereign guarantee of Government of Pakistan. The project revenues and cash flows are exposed to wind risk and operational risk. The operational risk aspect is mitigated by achieving benchmarks of availability and efficiency as agreed in the Energy Purchase Agreement (EPA). Under the cost-plus tariff regime, any variability in wind speeds is to be borne by the Company, due to which its cash flows may face seasonality.

Hydro China International Engineering Company Limited and Hangzhou Huachen Electric Power Control Company were the EPC contractors on the Project. The construction on the project started in September 2019 and commercial operation date (COD) was achieved in August 2021. HydroChina International Engineering Company Limited is O and M operator for the warranty period i.e. up to August 2023. The long-term O and M contractor is expected to be finalized soon by the management. Comfort is drawn from its vast international and local experience of the operators.

The Company delivered 88.46GWh electricity during 9MFY23 to the national grid. Short-term borrowing lines were availed in order to support its working capital needs, going forward a need to oversee the working capital management remains important. The Company has repaid seven installments (total number of installments forty for local SBP RE loan and fifty-two for foreign and local conventional KIBOR loan) of its project-related long-term debt by March 2023 in a timely manner without availing any forbearance period. However, the leverage is yet sizeable and will gradually decline along with the life of the project.

Ratings take comfort from the true-up tariff approved by the authority. However, upgrading operational performance in line with agreed performance levels is important. Improvement in inflows and availability of unutilized credit limits remained congenial for the ratings.

For more information, contact:


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