PACRA Maintains Entity Ratings of Foundation Power Company Daharki Limited - Press Release issued by The Pakistan Credit Rating Agency Limited.

Lahore -- January 09, 2023 (PPI-OT)

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


The ratings take comfort from strong business profile of Foundation Power Company Daharki Limited (Foundation Power) emanating from the demand risk coverage under Power Purchase Agreement and company's association with Fauji Foundation (FF). Meanwhile, the Implementation Agreement provides sovereign guarantee for cashflows, given adherence to agreed performance benchmarks. The ratings incorporate low operational risk, a result of the performance of KEPCO - the O and M operator.

However, the company has recently transitioned from outsourced O and M to self O and M and with experience technical/operational team, envisages to maintain the higher performance standards as demonstrated in the past. Fuel of the plant is 'low BTU' gas, which is supplied by an associate - Mari Petroleum Company Limited (40% owned by Fauji Foundation). Supplier being a sister concern reduces fuel supply risk. Payments received from Government against outstanding receivables under the signed MoU has slightly improved the liquidity profile. However, receivables have started to pile up again as a result of ongoing circular debt issue in the power sector.

Working Capital Management risk is substantially mitigated through aligning payments to fuel supplier with energy billing related receipts. As end September 2022, the...

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