Press Release

JCR-VIS Reaffirms Entity Ratings of Foundation Wind Energy-I Limited

Karachi, August 07, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Foundation Wind Energy-I Limited (FWEL-I) at ‘A+/A-1’ (Single A-Plus/A-One). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on October 31, 2017.

The assigned ratings of FWEL-I incorporate its strong ownership profile with Fauji Group, through Fauji Foundation and Fauji Fertilizer Bin Qasim Limited, and IIF Wind One Limited (CapAsia) being the major sponsors of the company. The project is established under the Policy for Development of Renewable Energy for Power Generation, 2006 which offers a guaranteed internal rate of return, cost indexation and pass-through tariff structure. Ratings of the company also draw support from cover against wind risk and power evacuation risk. In addition, presence of reputable operational and maintenance (O&M) contractor carrying sound track record mitigates the associated operational risk

The energy is purchased by National Transmission and Dispatch Company (NTDC) through its Central Power Purchasing Agency (CPPA) under the Energy Purchase Agreement; payment obligations of the power purchaser are guaranteed by the Government of Pakistan (GOP). Actual electricity generation during FY17 & 1HFY18 has been lower than the benchmark due to lower wind speed vis-à-vis benchmark; however, the associated risk is passed on to the power purchaser. Plant availability during the period under review stood at 98.0%.

Recurring revenues of the company are expected to largely sustain owing to fixed tariff and also on account of wind risk and evacuation compensation borne by the power purchaser. During FY17, profitability stood higher primarily on account of one-time adjustment of tariff true-up in revenue. During 9MFY18, revenue amounted lower, in comparison with previous 9 months of FY17, owing to the above mentioned adjustment in revenue in FY17, while cost of sales increased due to revision in O&M cost. As a result, gross profit and net profit stood lower vis-à-vis corresponding period last year.

Given stable cash flows, debt repayment capacity of the company is considered sound. Gearing and leverage of the company has also improved on a timeline basis owing to periodic repayment of borrowings and enhanced equity base.

For further information on this rating announcement, please contact the undersigned at 021-35311861-70 or Mr. Maimoon Rasheed at 042-35723411-13.

Javed Callea

Applicable rating criterion: Industrial Corporate (May, 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited JCR-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.JCR-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.JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.JCR-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 2018 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited