PACRA maintains the rating of WAPDA Dasu TFC-C

The Pakistan Water and Power Development Authority ("WAPDA") has issued the 3rd tranche of TFC worth PKR 4,235.3mln on 29-Mar-23. WAPDA will utilize this amount to partially finance the construction of the Dasu hydropower project Stage-I ("Dasu"). Dasu, once completed would become the second-largest hydel project in Pakistan. Dasu is a run of river project on the Indus River located in Dasu Kohistan, Khyber Pakhtunkhwa about 350 KM from Islamabad. The project started in 2017 and is expected to be completed in May'27. The project will be completed in two stages, the installed capacity would be 4,320MW (stage-I 2,160MW) and the total annual energy of 21,485 GWh will be produced (Stage-I 12,220 GWh). Stage -I project includes the construction of a hydraulic structure on the Indus River and underground power generation facilities. Out of the total land required (5,031 acres) for the project 5,022 acres have been acquired. The Project would be financed through a mix of WAPDA internally generated cash (15%) and borrowing (85%) i) Long-term (local & foreign) ii) Bonds Issuance (Islamic & Conventional). Currently, the physical progress of the Project stands at ~18.6%, while financial progress stands at 48.8%. The Series C TFC is part of the local financing facility package of PKR 144bln availed from the local syndicate bank for a period of 15 years, whereby PKR 35.2bln is to be raised in form of GOP guarantee backed TFC in five no. tranches. WAPDA has currently issued 4 Series (A, B, C, and D) of TFC by aggregate amount of PKR 28.471bln and remaining available limit ~PKR 6.729bln will be issued in the form of TFC E. The assigned rating of TFC incorporates an unconditional and irrevocable guarantee by the Government of Pakistan (GoP). The guarantee is covering the payment of the total outstanding amount of the TFC and the related profit component. GoP would pay the entire called amount immediately upon receiving a demand notice from the issue agent. Additionally, WAPDA has maintained a Debt Payment Account (DPA) with the Facility Agent which will be held under an exclusive lien in favor of the Issue agent. During each month, WAPDA shall deposit an amount equivalent to 1/6th of the upcoming Installment into the DPA, so that the aggregate amount available in the DPA on the upcoming Installment Date is equal to the relevant upcoming Installment. WAPDA has generated a topline of ~PKR 37.7 bln (6MFY22: ~PKR 48.8bln) and a bottom line of ~PKR 12.9 bln during 6MFY23 (6MFY22: ~PKR 8.8bln). WAPDA generated 28,903GWh electricity in FY22. WAPDA expects to generate an additional ~8,990MW by the completion of new hydel projects in the next six years.
WAPDA's financial profile draws comfort from strong cash flows. However, it remains dependent on the repayment behavior of the power purchaser.

About the Entity
The Pakistan Water and Power Development Authority (WAPDA), was established through an act of parliament in February 1958 (WAPDA Act 1958) for the development and maintenance of water and power resources. WAPDA has 22 projects with a total hydel generation capacity of 9,389MW.

About the Instrument
WAPDA has issued a rated, secured, privately placed WAPDA Dasu TFC-C ("TFC") of PKR 4,235.3mln on 29-Mar-23 to partially finance stage-1 of Dasu Hydropower Project. The TFC has a tenor of 9 years and carries a profit rate of 6MK + 1.45% p.a paid semi-annually in arrears, calculated on a 365 days basis on the outstanding principal amount. TFC will redeem after nineteen equal semi-annual installments amounting to PKR 223mln which commenced from May-23.