The Pakistan Credit Rating Agency Limited
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Ayesha Qasim

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PACRA Maintains Entity Ratings of Halmore Power Generation Company Limited

Rating Type Entity
(30-Apr-18 )
(13-Oct-17 )
Action Maintain Upgrade
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Halmore Power Generation Company Limited runs a 225MW power plant. The company operates in the regulated power sector. It enjoys sovereign guarantee against receivables from power purchaser - CPPA-G - given adherence to agreed performance benchmarks. The Company's operations and maintenance operator, General Electric International (GE), is a key source of comfort in managing the plant's operations. The company's financial risk profile is largely dependent on repayment behavior of the power purchaser. In recent periods, availability of primary fuel was challenging; however operational performance remained healthy. The company’s cash cycle witnessed a surge on account of delayed capacity payments by CPPA-G. Halmore funds its working capital requirements mainly through short term borrowing. Halmore has total long term debt of PKR 6,146mln as at end-Dec17 payable till December 2020. The company avails forbearance period while meeting its financial obligations.

Upholding operational performance in line with agreed performance levels would remain a key rating driver. Any significant increase in overdue receivables, as a result of rise in circular debt, may impact the ratings.

About the Entity
Halmore Power Generation Company Limited (HPGCL), an Independent Power Producer (IPP) with gross capacity of 225 MW, operating under 2002 power policy, is a combined gas cycle turbine plant with gas as primary and HSD as secondary fuel. The company commenced commercial operations in June 2011. Mian Muhammad Sharif – a non-resident Pakistan business magnate – owned 99.99% shares of the company however during the year after his demise his shareholding has been transferred to his son Mian Karim ud Din.

The four-member Board of Directors (BoD), including one executive director, is representative of the sponsoring family. Mr. Zaheer Ahmed is the Chief Executive Officer, he has over 26 years of experience in construction, operation and maintenance of power generation and transmission.

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.