The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Upgrades Entity Ratings of Halmore Power Generation Company Limited

Rating Type Entity
(22-Mar-22 )
(24-Mar-21 )
Action Upgrade Maintain
Long Term AA- A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Halmore Power Generation Company Limited (Halmore Power) runs a 225MW Combined cycle power plant. The plant achieved its commercial operations in June 2011 with its PPA valid for 30 years starting from the COD. It enjoys sovereign guarantee against receivables from power purchaser - CPPA-G - given adherence to agreed performance benchmarks. The ratings incorporate low operational risk, a result of established performance credentials of GE - the O&M operator. The required availability for Halmore Power under the PPA is 88%. During the period average plant availability remained in accordance with the agreed parameter. The plant generated 333,913,432 KWh of net electrical output for the six-month ended Dec 2021. Net income recorded during 6MFY22 was PKR 1,096mln (6MFY21: PKR 1,639mln). As a result of the revision in agreement with CPPA-G, the Company’s profitability indicators will be slightly lower going forward, albeit are considered to be adequate. However, in line with the agreement, the issue of long outstanding receivables has been assuaged, as the Company has received 40% of its receivables accumulated till November 2020 from the off taker in January 2022, with an agreement of full settlement within 6 months. The company successfully paid off its Long-Term project related debt in June 2021 resulting in a favourable impact on its financial risk profile. As on Dec 2021, the debt profile comprises short-term borrowings only, which have been availed to meet working capital requirements, mainly on account of accumulation of receivables from the off taker. However, with the receipt of outstanding receivables from the CPPA-G, under the master agreement the working capital cycle will improve and hence the utilization of short-term borrowing will decreases going forward.
Upholding operational performance in line with agreed performance levels would remain a key rating driver. Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels remain important.

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. 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.