PACRA Maintains Entity Ratings of Pak-Arab Pipeline Company Limited - Press Release issued by The Pakistan Credit Rating Agency Limited.

Lahore -- May 24, 2019 (PPI-OT)

Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

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The ratings are a reflection of PAPCO's distinctive business model driving its strength from a tariff based return model. PAPCO operates a 786 Km pipeline network dedicated for White Oil Pipeline (WOP). The tariff follows a pre-defined structure denominated in USD$, providing sustainability to the company's profit base. PAPCO has been operating its WOP for HSD only, at a capacity utilization of ~47% (~57% previously). Company's envisaged expansion plan is near to completion, which is expected to enhance and further leverage the infrastructure capacity, by way of transporting MOGAS.

The expansion is debt driven, wherein interest spread is very much akin to risk free rate. A level of comfort is drawn from the exclusive tariff given for the MOGAS project; all set to be operational by July'19. This will also create strategic advantage for the country. The cash flows of the company are persistently strong, providing sustainable coverages to debt repayments. The business risk is considered...