Press Release

VIS Reaffirms Ratings of FFBL Power Company Limited

Karachi, September 12, 2019: VIS Credit Rating Company Limited has reaffirmed the entity ratings of ‘AA-/A-1’ (Double A Minus/A-One) to FFBL Power Company Limited (FPCL). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on July 26, 2018.

The assigned ratings take into account moderate business risk, strong financial risk profile and sound corporate governance infrastructure of FPCL. Ratings also draw support from strong sponsor profile of the Company with FPCL being a subsidiary of Fauji Fertilizer Bin Qasim Limited (FFBL) which holds 75% shareholding in the company while the remaining 25% shares are owned by Fauji Foundation. Ratings also reflect track record of compliance with normative parameters stipulated in PPA since commencement of operations. Plant availability has remained around 89% during 2018 and 1HCY19 while capacity utilization of electricity has remained in excess of over 100% during the review period.

Business risk profile draws support from experience profile of in-house O&M team and limited Fuel Supply and Price Risk due to long-term supply contract and cost pass through mechanism built in the tariff. Despite take and pay arrangement, demand Risk has been assessed to be limited due to relatively high position in KE’s merit order along with dispatch guarantees from KE and firm commitment for off-take from FFBL. Liquidity profile of the company remains strong on the back of healthy cash flows and sound debt coverage metrics. Liquidity profile is also supported by timely collection of receivables which is in contrast to most IPPs. Despite sizeable projected dividend payout, capitalization indicators are expected to continue to improve over the rating horizon due to debt repayments and growth in equity base.

FPCL’s 118 Megawatt (MW) (Net Capacity: 103 MW) coal based power plant is amongst the first coal based projects to be operational in Pakistan and is located within the FFBL complex at Port Qasim. FPCL was incorporated to support the energy requirements of FFBL as a substitute of natural gas fuel based system. Moreover, the Company contributes a sizeable portion of its generating capacity to national grid via KE. The plant was constructed on a non-EPC basis; it commenced commercial operations on May 19, 2017. Operation and Maintenance (O&M) of the project is in house and is being managed by the FPCL team.

For further information on this rating announcement, please contact the undersigned (Ext: 207) at (021)35311861-70 or Mr. Talha Iqbal (Ext: 213) fax to (021)35311872-3.

Jamal Abbas Zaidi

Applicable Rating Criteria:
Oil & Gas Industry (November 2016)
Industrial Corporates (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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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