WAPDA’s Sukuk Consolidation Maintains ‘AAA’ Rating Amid Cost Escalation

Lahore: The Water and Power Development Authority (WAPDA) has successfully consolidated its five sukuk issuances, worth PKR 52.8 billion, into a single instrument while retaining the top credit rating of “AAA” from The Pakistan Credit Rating Agency (PACRA). The consolidation, effective from May 6, 2025, aims to streamline WAPDA’s debt profile and reduce administrative complexities.

Originally issued between May 2017 and May 2024, the sukuks were floated to partially finance the stage-1 development of the Dasu Hydropower Project. The new unified instrument, “WAPDA – Dasu Consolidated Sukuk – PKR 52.8bln,” maintains all pre-existing stipulations and obligations, preserving the rights and duties of all involved parties.

PACRA’s maintained rating reflects the Government of Pakistan’s guarantee, covering both principal and profit payments. WAPDA ensures timely servicing through a Deposit Payment Account (DPA) under lien with the Investment Agent, depositing monthly to meet installment requirements.

The cost of the Dasu Hydropower Project, initially approved at PKR 486 billion in 2014, has escalated to PKR 1.74 trillion by May 2025. Key factors include land acquisition challenges, inflationary pressures, and security-related expenses. Despite this, the project enjoys strong sovereign backing and a favorable tariff framework, ensuring cost recovery and financial resilience.

Financing for the project includes WAPDA’s internally generated cash and borrowings via long-term local and foreign loans, as well as Islamic and conventional bond issuances. As of fiscal year 2025, the project achieved 26.8% physical progress and 23.7% financial progress.

In the first half of fiscal year 2025, WAPDA reported revenue of PKR 57 billion and a profit of PKR 23 billion, marking a significant increase from the previous year’s figures. The government is expected to retain full ownership and control, given WAPDA’s pivotal role and strong government support.