The Pakistan Credit Rating Agency Limited
Press Release


Anam Waqas Ghayour

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PACRA maintains the Entity Ratings of Gul Ahmed Electric Limited

Rating Type Entity
(18-Feb-22 )
(19-Feb-21 )
Action Maintain Upgrade
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Gul Ahmed Energy Limited is setting up 50 MW wind power plant - Gul Ahmed Electric Limited (GEL) located in Jhimpir, District Thatta, Sindh. GEL is awarded a cost-plus tariff, with the payments to be received from CPPA-G backed by the sovereign guarantee. The project achieved financial close (FC) in November 2019. The project has gone beyond the required commercial operation date (COD) which was in October 2021. The management expects to achieve the COD by mid-March 2022. Gul Ahmed has injected the entire equity into the project. The company has also drawn entire local and foreign debt facility for the construction of the project. The project is near its completion phase and management is confident to achieve COD as per revised plan. Hydrochina International Engineering Company Limited & Hangzhou Huachen Electric Power Control Company are the Construction Contractors and Equipment Suppliers, comfort is drawn that they have ~40 years of worldwide experience in the wind power technology. The construction contractor will be the O&M operator for two years after COD; it will provide the warranty bond (10% of cost) in the form of irrevocable bank guarantee for 24 months after COD this will provide additional cushion for the sustainable financial risk profile. Further, the company will maintain the Debt Service Reserve Account (DSRA), which will be backed by 6 months SBLCs, in total providing coverage of six months on its financial obligations till retirement of debt. The project revenues and cash flows are exposed to wind risk, there is seasonal variation in the wind speed which effect the electricity generation, and ultimately cash flows may face seasonality. However, historical wind speeds provide comfort that GEL would be able to generate enough cash flows to keep its financial risk manageable. Comfort is drawn from the group association, having strong financial backing and relevant experience in successfully commissioning and operating 50MW Wind Energy Power Plant (Gul Ahmed Wind Power Limited) and running RFO based plant of 136 MW from last 25 years, which achieved COD in Nov-1997.
The Company has signed Energy Purchase Agreement ("EPA") with CPPA-G, as per the EPA, in case of non-project missed volumes the power purchaser shall be liable to pay the missed volumes calculated using tariff rates. The Company has adequate insurance coverage to cover the risk of business interruptions, marine & erection etc. Furthermore, external factors such as any adverse changes in the regulatory framework or prolonged delay in achieving COD may impact the ratings. Upholding financial discipline is also a consideration.

About the Entity
Gul Ahmed Electric Limited, incorporated in Dec 2015, is a Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by AEDB. The 50MW wind IPP is setting up in Jhimpir, District Thatta, Sindh. Mr. Danish Iqbal is the newly appointed CEO of the company. Mr. Danish has been associated with the company since its inception and thus has vast experience. The total estimated cost of the project is USD 65.5mln. Debt financing constitutes 80% of the project cost i.e., USD 50mln, which is financed from foreign financial institutions and locally from SBP under re-financing scheme at fixed rate 6%.

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