AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Lahore, September 30, 2023 (PPI-OT): Gul Ahmed Wind Power Limited (GAWPL) has set up 50 MW wind power plant – GAWPL located in Jhampir, District Thatta, Sindh, Pakistan. GAWPL is awarded a upfront tariff, with the payments to be received from CPPA-G backed by the sovereign guarantee. The project achieved financial close (FC) in March 2015. The plant successfully achieved its Commercial Operations (COD) in October 2016 and has been supplying electricity to the national grid since then. Comfort is also drawn from its association with strong sponsors including Gul Ahmed Energy, InfraCo Asia Indus Wind and IFC having relevant experience in energy sector, this is the key consideration in the assigned rating. The Company has signed Energy Purchase Agreement (“EPA”) with CPPA-G, as per the EPA, in case of non-project missed volumes, the power purchaser shall be liable to pay the missed volumes calculated using tariff rates. The Company has adequate insurance coverage to cover the risk of business interruptions.
GAWPL signed an O and M contract with Nordex Pakistan Private Limited and Descon Engineering Limited in September 2014. The Company has long term project debt that is repayable in a period of ten years out of which approximately ~62% of foreign and ~40.2% of local debt has been paid as of FY-23. Further, the company is maintaining the Debt Service Reserve Account (DSRA), which is filled by internal cash generation and provides debt coverage of approximately 7 months on its financial obligations till retirement of debt.
Currently the Company managing its working capital through internal cash generation and a sound liquidity is available on the balance sheet of the Company in the form of liquid investments of approximately ~PKR 4.5bln. FCFO’s for June’23 stood at PKR 4,221mln while total receivables were recorded at PKR 4,593mln. Company has generated 90.63 GWh electricity in FY-23. The project revenues and cash flows are exposed to wind risk, there is seasonal variation in the wind speed which effect the electricity generation, and ultimately cash flows may face seasonality. However, historical wind speeds provide comfort that GAWPL would be able to generate enough cash flows to keep its financial risk manageable.
External factors such as any adverse changes in the regulatory framework may impact the ratings. Going forward, the capacity of the Company to generate stable cash flows in order to make timely repayments against the project debt remains crucial. With rising concerns about circular debt, the trend of payments received from CPPA-G against invoices will further impact ratings.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com
The post PACRA Assigns Initial Entity Ratings to Gul Ahmed Wind Power Limited appeared first on Pakistan Business News.