Press Release

JCR-VIS Assigns Entity Ratings to National Power Parks Management Company (Pvt.) Ltd

Karachi, October 24, 2017: JCR-VIS Credit Rating Company Limited (JCR-VIS) has assigned initial entity ratings of “AA+/A-1+” (Double A Plus / A-One Plus) to National Power Parks Management Company (Pvt.) Ltd (NPPMCL). Outlook on the assigned ratings is ‘Stable’.

The ratings assigned to NPPMCL take into account its strong ownership profile with the company being wholly owned by Government of Pakistan (GoP) through representatives of Ministry of Energy (Power Division). The sole purchaser of power being produced by NPPMCL is Central Power Purchase Agency (Guarantee) Limited (CPPA), a GOP owned and controlled entity. NPPMCL is currently in the advance stage of setting up two Re-liquefied Natural Gas (RLNG) based Combined Cycle Gas Turbine (CCGT) power plants of 1,275.5MW and 1,276.7MW (at ISO) at Balloki, District Kasur and Haveli Bahadur Shah (HBS), District Jhang. The project is established under the Power Generation Policy, 2015 which offers a guaranteed Internal Rate of Return on equity, cost indexation and pass-through structure in line with other IPPs projects in Pakistan. Power generated shall be sold to CPPA under a Power Purchase Agreement and the obligations of CPPA are guaranteed by the GoP under the Implementation Agreement. Combined cycle operations of both the plants are expected to be achieved in January, 2018.

The ratings draw comfort from the “Suspension” clause in the Power Purchase Agreement which entitles NPPMCL to suspend its plant operations in case the receivable amount from CPPA at any point of time remains outstanding for 90 days or more, while continue to receive capacity payments during the suspension period. This provision further insulates the Company from circular debt risk.

NPPMCL has signed Engineering, Procurement & Construction (EPC) agreement with contractors’ carrying satisfactory track record in their respective fields. The obligations of EPC contractor are adequately covered through a performance guarantee. In case of Balloki plant, EPC contractor has also arranged a parent guarantee. Moreover, liquidated damages will be imposed on the EPC contractor in the event performance benchmarks are not met pertaining to delay in completion, net power output and net heat rate.

In its initial tariff determination, NEPRA has approved a debt to equity of 70:30 and equity investment for both plants was injected by GoP. Debt financing of both plants was arranged through Public Sector Development Programme (PSDP). However, the same has been converted into GoP equity as of June 30, 2017.

For further information on this rating announcement, please contact undersigned (Ext: 201) at 35311861-70 or fax to 35311872-3.

Javed Callea

JCR-VIS Entity Rating Criteria Industrial Corporate (May 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2017 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited