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Karachi, VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Lucky Renewables (Pvt) Limited (formerly Tricom Wind Power (Pvt) Limited) at ‘A/A-2’, reflecting its sustained good credit quality and stable outlook in a dynamic economic environment.
According to VIS Credit Rating Company Limited, the medium to long-term rating of ‘A’ for Lucky Renewables indicates the company’s good credit quality with adequate protection factors, although these may be influenced by changes in the broader economy. The short-term ‘A-2’ rating highlights the company’s good certainty of timely payment, underpinned by strong liquidity factors and solid company fundamentals. The stable outlook on these ratings is consistent with the previous assessment announced on December 29, 2022.
Established in 2017, Lucky Renewables has successfully set up a 50MW wind power plant in Jhimpir, District Thatta, Sindh. The company’s ratings benefit from its association with the Yunus Brother Group, a well-established conglomerate with a strong financial profile across multiple sectors, including cement, power generation, and real estate. A significant factor in the ratings is the company’s 25-year long Energy Purchase Agreement (EPA) with the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G), which mitigates off-take risk and is backed by a Government of Pakistan (GoP) guarantee. Operational risks are well-managed, partly due to a long-term OandM contract with an experienced operator, although the company remains exposed to wind risk.
Lucky Renewables faced challenges in FY23 due to delayed tariff adjustments, impacting profitability. Despite forgoing interim relief from the GoP, the company has filed a true-up petition, anticipating a resolution by the end of December 2023. The company has navigated elevated liquidity risks and a higher trade debts to sales ratio due to the country’s intercorporate debt issues and intermittent payments from CPPA-G. Nevertheless, Lucky Renewables has consistently met its financial obligations on time, supported by sponsor backing and related party loans, although leverage indicators remain high.
The company’s ratings are closely tied to the finalization of the true-up tariff and any subsequent improvement in financial indicators, indicating the importance of regulatory decisions in the renewable energy sector.
For more details on this rating announcement, interested parties can contact VIS Credit Rating Company Limited using the provided contact information.
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