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Anam Waqas Ghayour

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PACRA Assigns Initial Entity Ratings to Orient Power Company (Pvt.) Limited

Rating Type Entity
(10-Jun-22 )
Action Initial
Long Term AA-
Short Term A1
Outlook Stable
Rating Watch -

Orient Power Company (Private) Limited (Orient Power or the Company) has been established to set up and operate, combined cycle dual fuel, 212.7 MW net power generation plant, for generation of electricity and onward sale of electricity to the Power Purchaser (CPPA-G). The plant achieved its commercial operations date (COD) on May 24, 2010. The ratings reflect strong business profile of the Company emanating from the demand risk coverage under 30 year Power Purchase Agreement (PPA) signed between CPPA-G and the Company starting from the COD. Meanwhile, the Implementation Agreement provides sovereign guarantee for cash flows, given adherence to agreed performance benchmarks (Availability: 90%, Efficiency: 51.2% on gas/RLNG and 48.5% on HSD, subject to annual heat rate degradation and part load curves. The Company continues to meet its performance benchmarks. Comfort is drawn from General Electric International Inc. (G.E) which is the Operations, Maintenance and Service (O&M) Contractor having both local and international experience in the energy sector. The primary fuel of the plant is Gas/Regasified Liquefied Natural Gas (RLNG) which is supplied by Sui Northern Gas Pipeline Limited (SNGPL) and HSD is the backup fuel. Thus fuel supply risk is considered adequate, pertaining to the meaningful addition of RLNG in Pakistan’s fuel mix. During the period, 6MFY22 & FY21, Orient Power delivered ~445GWh, & ~623GWh of electricity to the national grid and recorded sales revenue of PKR ~10,327mln & PKR ~11,643m, with a Net Profit of PKR ~879mln & PKR ~1,194mln respectively. Equity of the Company as of 6MFY22 stood at PKR ~15,736mln. Pursuant to MoU signed with the CPPA-G, the Company has received its first installment approx. of PKR 2.88bln on Jan 22 (40% of outstanding overdue receivables as on November’ 20 (PKR~ 7.2bln) in form of 1/3rd cash, 1/3rd PIB and 1/3rd Sukuk’s) this improve the liquidity, rest 60% will be received after 6 months of the first installment. Pursuant to Master Agreement dated 11 February 2021, the Company has revised its ROE in respect of local equity portion (29%) to 17% from 15% with no dollar indexation and in respect of foreign equity portion (71%) ROE has been revised to 12% from 15% with dollar indexation intact. The working capital requirements of the Company are fulfilled through mix of short term borrowing and deployment of internal cashflows. Currently the Company has arranged amicable working capital lines of PKR ~8,087mln out of which 77% (PKR ~6,254mln) had been utilized as of 6MY22. Orient Power has successfully paid its project related debt in March’20.
Upholding operational performance in line with agreed performance levels would remain a key rating driver. Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels remain important

About the Entity
Orient Power Company (Private) Limited (Orient Power) - was established in 2003 as a private limited company with capacity of 229MW (Gross ISO), is operating under the Power Policy 2002. Orient Power register office is located in Lahore and plant is located in Balloki, District Kasur. The Board of Directors of Orient Power comprises of seven members, including Mr. Kashif Bashir Rana is the CEO of the company He is a Chartered Accountant with over twenty-five years of post-qualification experience, primarily in Power Sector and three years in textile sector. He is accompanied by a team of qualified and experienced individuals.

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.