Press Release

VIS Reaffirms Ratings of Quaid-e-Azam Thermal Power (Private) Limited

Karachi, May 24, 2021: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Quaid-e-Azam Thermal Power (Private) Limited (QATPL) at ‘AA/A-1’ (Double A/ A-One). The medium to long-term rating of ‘AA’ denotes high credit quality coupled with strong protection factors. Moreover, risk factors may vary slightly with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on April 28, 2020.

QATPL is wholly owned by the Government of Punjab (GoPb). The company owns and operates Re-Liquefied Natural Gas (RLNG) based Combined Cycle Gas Turbine (CCGT) power plant of 1,163 MW generating capacity at Bhikki, District Sheikhupura - Punjab. The ratings draw comfort from the presence of a clause in the Power Purchase Agreement (PPA) whereby QATPL will continue to receive capacity payments during the period of non-supply of gas. In addition, the “Suspension” clause in the PPA allows the company to suspend its plant operations if the receivable amount from Central Power Purchase Agency (Guarantee) Limited (CPPA) at any point in time remains outstanding for 60 days or more, while QATPL will continue to receive capacity payments during the suspension period. This provision further protects the company from the circular debt risk.

Assessment of financial risk profile incorporates subdued sales in FY20 on account of lower off-take, strengthened financial profile as evident from improved profit margins. Albeit, finance cost increased considerably during the outgoing year, bottom-line increased on the back of higher gross margins and other income mainly related to interest income on delayed payments from CPPA-G. Assigned ratings also take into account impact of ROE reduction on overall profitability, going forward. Capitalization indicators have improved on a timeline basis owing to re-payments and higher growth in equity base led by profit retention. Cash flow coverages have weakened during 1HFY21 on account of sizeable interest charges paid due to timing difference; however the same are expected to normalize at end-June’21. Timely recovery of elevated trade debts is considered important. Corporate governance framework of the company is considered adequate.

For further information on this rating announcement, please contact Ms. Asfia Aziz and/or the undersigned (201) at 021-35311861-66 or email at

Javed Callea

VIS Entity Rating Criteria Industrial Corporate (May 2019)

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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited