The Pakistan Credit Rating Agency Limited
Press Release


Anam Waqas Ghayour

Applicable Criteria

Related Research

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 Upgrades the Entity Ratings of Saif Power Limited

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

The ratings reflect strong business profile of Saif Power Limited (Saif Power) emanating from the demand risk coverage under Power Purchase Agreement signed between Central Power Purchasing Agency (CPPA-G) and the company. Meanwhile, the Implementation Agreement provides sovereign guarantee for cashflows, given adherence to agreed performance benchmarks. Saif Power continues to meet its availability (88%) and other performance benchmarks. Fuel supply risk is considered low as they procure RLNG from SNGPL with good credit terms. Moreover, the company has arrangement in place to procure High-Speed Diesel (HSD), the backup fuel, from Shell Pakistan. The ratings stemmed from the fact that the long-term debt of the company was fully paid successfully in March-2020. As a result of the revision in agreement with CPPA-G, the Company’s profitability indicators will be slightly lower going forward. Short-term borrowing lines are available and mainly used to fund any short-fall in working capital requirements. There is ample cushion available in short-term lines. Given the liquidity situation, company managed to sustained the utilization at 52%. Settlement of overdue receivables is crucial. As a key point of MOU with GoP, Saif Power received first installment of 40% of pending receivables from the off taker.
Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels remain important. Accumulation of circular debt would pose threat to the company’s ability to continue with this practice. However, the management remains committed to sustain improvement in management of commercial obligations reflected by the timely and fully repayment of long-debt.

About the Entity
Saif Power, established in 2004, as Independent Power Producer is operating under the Power Policy 2002. It is a Combined Cycle thermal power plant on build-own-operate (BOO) basis with a gross capacity of 225 MW. Saif Power's plant commenced operations on April 30, 2010. Saif Power was listed on Pakistan Stock Exchange in December 2014. Saif Holdings Limited, with ~34% stake, is the majority shareholder of the company followed by sponsor family (16%), Orastar Limited (~17%), and Financial Institutions (~15%). The seven-member Board of Directors (BoD), excluding CEO, comprises five representatives of the sponsoring family and two independent directors. Nominees of Saif Group are experienced professionals. Mrs. Hoor Yousafzai chairs the board. The Chief Executive Officer, Mr. Sohail H. Hydari, has been associated with the company since inception. He is assisted 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.