The Pakistan Credit Rating Agency Limited
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Muhammad Mubashir Nazir

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PACRA Upgrades Entity Ratings of Din Energy Limited

Rating Type Entity
(13-Oct-22 )
(22-Oct-21 )
Action Upgrade Initial
Long Term A A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Din Energy Limited (DEL) has set up a 50MW wind power plant “Din Energy Limited” in Jhampir. DEL is awarded upfront tariff, with the payments to be received from CPPA-G backed by the sovereign guarantee. Hydrochina International Engineering Company Limited & Hangzhou Huachen Electric Power Control Company are the EPC contractors, comfort is drawn that they have vast experience in wind power technology. The construction contractor is the O&M operator for two years after COD; it will provide the warranty bond (10% of EPC cost) in the form of irrevocable bank guarantee for 24 months after COD. These bank guarantees provide additional cushion for the sustainable financial risk profile. The Upgrade in ratings incorporates commissioning of the complex by declaring commercial operations on March 27, 2022, after taking into account all the pre-requisites mentioned in the EPA, and successfully completed the Reliability Run Test on 26th March 2022 at 17:00 hrs, as a result of which the project does not feature any further construction risk. Further, DEL has paid 1st installment on 30.06.2022 & 2nd on 30.09.2022 of project-related loan on timely basis. DEL maintains the Debt Service Reserve Account (DSRA), which is 100% filled by 6 months SBLCs, in total providing coverage of six months on its financial obligations till maturity. Project revenues and cash flows are exposed to wind risk, there is seasonal variation in the wind speed which affect the electricity generation, and ultimately cash flows may face seasonality. However, historical wind speeds at the Jhimpir wind farm provide comfort that DEL would be able to meet the benchmark capacity factor and generate enough cash flows to keep its financial risk manageable. DEL has signed Energy Purchase Agreement ("EPA") with CPPA-G, as per the EPA, in case of non-project missed volumes the power purchaser shall be liable to pay the missed volumes calculated using tariff rates. DEL has insurance coverage to cover the risk of business interruptions, marine & erection etc. Short-term borrowing lines were availed in order to support its working capital needs, going forward a need to oversee the working capital management remains important. However, the leverage is yet sizeable and will gradually decline along with the life of the project. Management in near future will put forth the requisition for true up tariff to NEPRA, for the final determination.
Upgrading operational performance in line with agreed performance levels is important. Improvement in inflows and availability of unutilized credit limits remained congenial for the ratings.

About the Entity
Din Energy Limited, was incorporated On July 02, 2014 is Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by AEDB. DEL is majorly owned by Din Group. The total estimated cost of the project is USD 63.91mln. Debt financing constitutes 80% of the project cost i.e. USD 51.12mln, which is financed from foreign financial institutions and locally from SBP under re-financing scheme at 3MKIBOR plus 1.75%. The foreign facility has tenor of thirteen years with two years grace period and quarterly repayments while the local loan has tenor of ten years with 2 years of grace period. Din Energy Limited has four-member board of directors with all members belonging to the DIN Group, which is principally engaged in the textile and real estate sector. Mr. Shaikh Muhammad Pervez currently chairing the Board. Mr. Fawad Jawed is the CEO, has been associated with the Group in different capacities, leading DEL with his visionary leadership. The management team comprises qualified and experienced professionals.

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