The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Assigns Initial Entity Ratings to Hawa Energy Private Limited

Rating Type Entity
(27-Apr-22 )
Action Initial
Long Term A
Short Term A1
Outlook Stable
Rating Watch -

Hawa Energy Private Limited (HEPL) is operating a 49.735MW wind power plant, located in Jhimpir, District Thatta, Sindh. The project is established under the Renewable Energy Policy 2006 by the Alternative Energy Development Board (AEDB). The plant achieved its commercial operations date (COD) in March 2018. The project revenues and cash flows are exposed to wind risk and operational risk. Under the upfront tariff regime, any variability in wind speed is to be borne by the Company. However, historical wind speed patterns provide comfort that HEPL would be able to produce electricity to generate sufficient cash flows. Operational Risk is concerned with the plants availability and efficiency as per the benchmarks agreed in the Energy Purchase Agreement (EPA). Comfort is drawn from General Electric International Inc. (G.E) appointed as the Operations & Maintenance (O&M) operator having both local and international experience in the energy sector. CPPA-G has entered in an agreement with HEPL as the power purchaser for a tenure of 20 years starting from the COD. The Government of Pakistan has provided a sovereign guarantee against dues from CPPA-G. The working capital requirements are fulfilled through in-house adequate cash flow generation. Net cash from operating activities of the Company stood at ~PKR 1,735mln for the nine-month period ended on Sept’2021 (CY20: ~PKR 1,028mln). HEPL is successfully making repayments against its project debt (USD 95.3mln) that is entirely obtained from US International Development Finance Corporation (DFC). The company has successfully repaid approximately 31% of its long term debt. Operational needs are met through internal cash. However, the financial risk profile of the company is subject to any dividend pay out commitment and short-term borrowings undertaken by the company in future.
Upholding operational performance in line with agreed performance levels is important. Receipt pattern from power purchaser, debt repayment behaviour and liquidity cushion would impact the directions of ratings. External factors such as any adverse changes in the regulatory framework and weakening of financial profile may impact negatively.

About the Entity
HEPL is a wholly owned subsidiary of Hawa holdings Limited, a company incorporated in British Virgin Islands. The sponsors of the company are JCM Power (51%), DL Energy and Asma Capital (35%) and Mr. Bruno C. Bucari (14%). Both DL Energy and JCM Power have a proven history of implementing power projects globally with a focus on renewable sector. The total cost of the project was USD 127.1mln which was financed with a debt-to-equity ratio of 75:25. HEPL board comprises of seven members from the sponsoring companies. The Chairman Mr. Muhammad, an engineer by profession has over a decade of experience in the Energy Sector with exposure to key developments in the renewable energy industry. Mr. Omar Masrur (CEO) has an overall experience of 30 years in Investment Banking, Structured Finance, Business Operations, Strategy and Investment. He is accompanied by a team of experienced individuals to assist him on day-to-day operations.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.