PACRA Affirms AAA Rating for WAPDA’s Consolidated Dasu TFC

Lahore: The Pakistan Credit Rating Agency Limited (PACRA) has affirmed the “AAA” credit rating for the Water and Power Development Authority’s (WAPDA) Dasu Consolidated Term Finance Certificate (TFC), valued at PKR 35.2 billion. This decision follows WAPDA’s move to consolidate five previously issued TFCs, originally floated between May 2017 and May 2024, into a single instrument. The consolidation, effective from May 6, 2025, aims to streamline WAPDA’s debt profile and reduce administrative complexities.

The consolidation retains all stipulations and obligations of the original TFCs, ensuring their validity and enforceability remain unchanged. The rights and obligations of all contractual parties are preserved, aligning the consolidated TFC’s rating with the previous ratings of the individual instruments. The “AAA” rating reflects the unconditional and irrevocable guarantee by the Government of Pakistan (GoP), covering both principal and profit, with payments assured upon demand.

To ensure timely servicing, WAPDA maintains a Deposit Payment Account (DPA) under lien with an Investment Agent. Monthly deposits into the DPA cover one-sixth of the upcoming installment, ensuring the full amount is available on the installment date. The Dasu Hydropower Project, financed through a combination of WAPDA’s internally generated cash, long-term borrowings, and bond issuances, has seen its cost escalate to PKR 1.74 trillion by May 2025. This marks a 258% increase from the original PKR 486 billion approved in 2014, attributed to land acquisition challenges, inflationary pressures, and security-related costs.

The project has achieved approximately 26.8% physical progress and 23.7% financial progress as of the fiscal year 2025. During the first half of FY25, WAPDA reported PKR 57 billion in revenue and PKR 23 billion in profit, marking an increase from the previous year’s figures.

The project benefits from strong sovereign support, with financing sourced through GoP grants, re-lending, and loans. WAPDA also operates under a favorable tariff framework that ensures cost recovery and reasonable returns, strengthening its financial capacity to deliver major infrastructure projects. Government ownership and control of WAPDA are expected to continue, given its critical role and the government’s direct oversight and support.