The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Assigns Initial Ratings to Quaid-e-Azam Solar Power (Pvt.) Limited

Rating Type Entity
(04-Apr-22 )
Action Initial
Long Term AA
Short Term A1+
Outlook Stable
Rating Watch -

Quaid-e-Azam Solar Power (Pvt.) Limited (QASPL) is operating a 100MW Solar Power Plant – set up by the Government of Punjab (GoPb), and commenced its operations in Jul-15 and operates under the Renewable Energy Policy 2006. The Ratings take into account the association of GoPb. A long-term energy purchase agreement of 25 years with CPPA-G, mitigating the underlying business and economic risk factors, along with sovereign guarantees on power purchaser’s payment obligation, which also contributes positively towards the ratings. Comfort is drawn from TBEA Xinjiang Sunoasis Company Ltd. – the O&M operator having international experience. Free cash flows of the Company are in a comfortable position to make debt repayments. QASPL has repaid ~51% of its debt on time, facet of strong financial profile and sound working capital management which currently are fulfilled through internal cash flow generation. This generation ability provides strength to the company and creates room for further expansion, which the management is already considering. Ratings incorporate adherence to performance benchmarks through power generation, underpinned by healthy cash flows generation.
Upholding operational performance in line with agreed performance levels is important. Improving, indeed aligning, receipt pattern from power purchaser, debt repayment behavior and liquidity cushion would impact the directions of ratings. External factors such as any adverse changes in the regulatory framework and weakening of financial profile may impact negatively.

About the Entity
Quaid-e-Azam Solar Power Limited, incorporated in 2013. The 100MW Solar Plant is set up in Cholistan, Punjab. The total cost of the project was PKR 15,130mln. Debt financing constitutes 75% of the project cost i.e., PKR 11,137mln, which is financed from a local bank. The project was commissioned in July 2016. QASPL Board of Directors (BoD) comprises twelve members, excluding the CEO. Out of these, five members represent Government of Punjab through different ministries and seven members are the independent directors including the chairman. Mr. Muhammad Badar ul Munir is the CEO of the company accompanied by an experienced 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.