The Pakistan Credit Rating Agency Limited
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Saadat Mirza

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PACRA Maintains Entity Ratings of Halmore Power Generation Company Limited

Rating Type Entity
(25-Mar-20 )
(11-Oct-19 )
Action Maintain Maintain
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

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. As of Jan-2020, short term lines utilization stood at 84%. 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 -Jan 2020, warranting management’s immediate attention. In this regard, the company has raised 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.
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.

About the Entity
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.

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.