Lahore, November 10, 2022 (PPI-OT):Liberty Power Tech Limited (the Company) runs a 200MW power plant based on Residual Fuel Oil. The Company operates in the regulated power sector. The plant achieved its commercial operations in Jan’2011 with its PPA valid for 25 years starting from the COD. It enjoys a sovereign guarantee against receivables from power purchaser given adherence to agreed performance benchmarks. Fuel supply risk is adequately covered as they procure from different suppliers with good credit terms; being managed since 2011. The Company continues to meet its availability (90%) and efficiency (45%) benchmarks.

The plant generated 925 GWh of net electrical output for the year ended at June, 2022. Net income recorded during 9MFY22 was PKR 2,063mln (6MFY22: PKR 1,143mln). As a result of the revision in agreement with the power purchaser, the Company’s profitability indicators will be slightly lower going forward, albeit are considered to be adequate. However, in line with the agreement, the issue of long outstanding receivables has been assuaged, as the Company has received remaining 60% of its receivables from the off taker in June 2022 as a second tranche.

First tranche has been received in Jan 2022. The company successfully paid off its long-term project-related debt in Dec 2020 resulting in a favourable impact on its financial risk profile. As on March 2022, the debt profile comprises short-term borrowings only, which have been availed to meet working capital requirements, mainly on account of accumulation of receivables from the off taker. However, with the second receipt of outstanding receivables from the power purchaser, under the master agreement the working capital cycle has improved and the utilization of short-term borrowing is expected to decrease going forward with timely repayments.

The Company’s repayment of debt fully comforted its financial profile thus considered positive for ratings. Though the Company has achieved sound financial discipline, but maintaining the plant’s availability and operational benchmarks to the agreed level remains integral to the assigned ratings.

Meanwhile, seeking comfort in the take or pay tariff regime and expected receipt from outstanding receivables in respect of reported circular debt in coming months will further provide a cushion in working capital financing, in turn, will strengthen the financial risk profile.

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