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The Pakistan Credit Rating Agency Limited
Press Release

Date
04-Mar-19

Analyst
Sehar Fatima
sehar.fatima@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Engro Elengy Terminal (Private) Limited

Rating Type Entity
Current
(04-Mar-19 )
Previous
(04-Sep-18 )
Action Maintain Maintain
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The ratings reflect sustained operations of Engro Elengy Terminal (Private) Limited (EETPL), given revenues and cash flows are guaranteed by Sui-Southern Gas Company (SSGC), subject to adherence to agreed parameters. SSGC, the sole intermediary (rated "A+"), has demonstrated timely payments against committed purchases despite challenges. The business profile of EETPL is strong, emanating from GOP's commitment to manage prevailing energy crises in the country by way of imported LNG. Thus, a sizable and recurring stream of income is ensured. The ratings incorporate rapid developments in the industry owing to gas shortage in the domestic market. Engro Elengy continues to meet its availability (CY18: 97.3%) - an outcome of technically sound operations and maintenance operator, Excelerate Energy (EE), is a key source of comfort in managing the plant's operations. A stable stream of revenue leads to build up of surplus cash, which after making committed payments to lenders would be distributed to sponsors regularly, as per policy, going forward. The working capital cycle is solely the differential of the days of receipts from SSGC and payments to suppliers. Payments from SSGC are secured by way of Stand-By Letter of Credit (SBLC), due to which chances of deterioration in the Working capital cycle are very low. This keeps working capital needs under check. Company's total long-term debt of PKR 6,209mln as at end-Dec18, payable till Dec23. Corporate Guarantee from Engro Corporation soothes financial risk. The governance structure has been further nurtured after induction of Vopak LNG Holding B.V., which will take representation on the board as well.

The ratings take significant support from EETPL's association with Engro Corporation Limited, which has demonstrated financial strength. The ratings remain dependent on smooth operations of the terminal, and conduct of SSGC with reference to the timely payments to Engro Elengy Terminal. Meanwhile, debt service coverages and other financial related metrics must remain strong.

About the Entity
Engro Elengy Terminal (Private) Limited (EETPL) is a Private Limited Company, incorporated in Pakistan on January 9, 2014, specifically for the purpose of establishing and operating an LNG Terminal for the receipt, storage and re-gasification of LNG. The Company commenced its operations on March 29, 2015, as the first ever LNG Terminal Operator in Pakistan. The LNG Terminal of the Company is located in South Western Zone, Berth no.13, Port Qasim, Karachi. The company has leased a 600mmscfd baseload Floating Storage and Re-gasification Unit (FSRU) from Excelerate Energy (EE), who is also an operation and maintenance operator of the company. Engro Corporation Limited holds 56% while remaining 44% is with Vopak LNG Holding B.V. (recently acquired 15% stake held by International Finance Corporation). The board of directors (BoD) of Engro Elengy Terminal comprises seven members including the CEO; majority members represent Engro Group. The CEO Mr. Jahangir Piracha joined Engro Elengy, since March 17. He is supported by a team of qualified and experienced individuals as his management team.

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.