PACRA Maintains Entity Ratings of Halmore Power Generation Company Limited
Halmore Power Generation Company Limited (Halmore Power) 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 period, availability of primary fuel was adequate on account of better energy mix; hence operational performance remained intact. Additionally, because of the mounting receivables and consequent funding thereof from banking lines, remaining cushion in the available working capital facilities is limited, warranting further space to be created. As of Mar-19, short term lines utilization stood at 88%. Current borrowings mainly short-term reflects the need to bridge the working capital requirements and maintenance of projects. Because of the mounting receivables and consequent funding thereof from banking lines, there is minimal cushion in the available working capital facilities as it has been highly utilized as at end-Mar19, warranting management’s immediate attention. In this regard, the company is in the process of obtaining new short term borrowing lines from Banks. Further, the company expects recovery of receivables coupled with low generation during next 3 to 4 months due to which cushion in lines will be created. Halmore Power has total long-term debt of PKR 3,075mln as at end-June 19 payable till September 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. Accumulation of circular debt would pose threat to the company’s ability to continue with this practice. Any significant increase in overdue receivables, as a result of rise in circular debt, may impact the ratings.
Halmore Power Generation Company Limited, 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 Karim ud Din owns 99.99% shares of the company.
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.