June 24, 2022 (PPI-OT)
Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)
Tapal, Ismail and Akhtar groups has set up a 30MW wind power plant - Act Wind (Pvt) Limited ("Act Wind" or "the Company") in Jhimpir, under the Policy for Development of Renewable Energy for Power Generation, 2006 which offers a guaranteed internal rate of return, cost indexation, and pass-through tariff structure. The project revenues and cash flows are exposed to two main risks. First; wind risk. Under the upfront tariff regime, any variability in wind speeds is to be borne by the Company, due to which its cash flows may face seasonality. However, historical wind speeds provide comfort that ACT Wind would be able to generate enough cash flows to keep its financial risk manageable.
Second; operational risk. The Company has to maintain the plant's capacity factor at 31% annually, and is ready to deliver electricity to CPPA-G, CPPA-G is liable to pay the whole tariff even if no purchase is done. Comfort is drawn from HydroChina - the O and M operator - having both international and local market experience. The Company has adequate insurance coverage. During the period, 6MFY22 and FY21, Act wind recorded sales revenue of PKR ~1,108mln and PKR ~2,068mln along with a Net Profit of PKR ~523mln and PKR ~927mln respectively.
The Company has received its outstanding receivables (as of Nov'21) in form of 1/3rd cash, 1/3rd PIB and 1/3rd Sukuk's, under the agreement signed with CPPA-G, this improves the liquidity profile of the Company. Pursuant to this agreement the Company has revised its ROE to 13% from 18% with dollar indexation continues to apply. Working capital requirements of Act Wind are fulfilled through in-house adequate cash flow generation, without any utilization of short-term borrowing lines. Free cash flows of the Company are in a comfortable position to make timely debt repayments. Act Wind has repaid ~30% of its debt on time without availing benefit of forbearance period, facet of strong financial profile and working capital management.
Act Wind is also managing its short-term investment book by investing in various mutual funds to strengthen the bottom-line and cash flows through dividend inflows. Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels remain a key rating driver. Company's repayment behaviour, from internally generated cashflows, would be considered positive for ratings.
For more information, contact:Analyst,The Pakistan Credit Rating Agency Limited (PACRA)Awami Complex, FB1, Usman Block New Garden Town,Lahore, PakistanTel: +92-42-5869504-6Fax: +92-42-5830425Email: email@example.comWebsite: www.pacra.com