The Pakistan Credit Rating Agency Limited
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Madiha Sohail

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PACRA Maintained the Rating of WAPDA | Sukuk | May-17 PKR 15,000mln

Rating Type Debt Instrument
(16-Dec-22 )
(17-Dec-21 )
Action Maintain Maintain
Long Term AAA AAA
Short Term - -
Outlook Stable Stable
Rating Watch - -

The Water and Power Development Authority of Pakistan ("WAPDA") has issued the first tranche of sukuk on 08-May-17. WAPDA utilized this amount to partially finance the construction of the Dasu hydropower project ("The project" or "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 is expected to be completed in two stages, the installed capacity would be 4,320MW (stage-I 2,160MW) and the annual energy which would be produced is 21,485 GWh (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 (5034 acres) for the project 4652 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). Till to date, series of TFCs and Sukuks amounting to PKR 14.235bln and PKR 21.353bln respectively, have issued while series C of TFC and Sukuk are in process of issuance. The assigned rating of sukuk 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 sukuk 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) under the exclusive lien of the issue agent. Within the first fifteen days of each month commencing from the Musharaka Contribution Date. WAPDA is depositing an amount equal to 1/6th of the upcoming installment in the DPA. The rating apart from a debt payment and guarantee mechanism recognizes WAPDA's strategic importance as the major hydroelectric power supplier to the country. WAPDA generated 32,073GWh electricity in FY21. WAPDA expects to generate an additional ~8,070MW by the completion of new hydel projects in the next four years.
WAPDA's financial profile draws comfort from strong cash flows. However, it remains dependent on the repayment behavior of the power purchaser. Continued compliance with the predefined covenants of sukuks, including maintenance of DPA would remain critical

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 21 projects with a total hydel generation capacity of 8,420 MW.

About the Instrument
WAPDA has issued a rated, secured, privately placed, Islamic certificate WAPDA | Sukuk | May-17 ("Sukuk") of PKR 15,000mln on 08-May-17 to partially finance stage-1 of Dasu Hydropower Project, a 2,160MW run-of-river project. Stage -I project includes the construction of a hydraulic structure on the Indus River and underground power generation facilities. The Sukuk has a tenor of 15 years and carries a profit rate of 6MK + 1.45% p.a paid semi-annually. Sukuk will redeem after twenty equal semi-annual installments amounting to PKR 750mln which commenced from 8-Nov-22.

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