The Pakistan Credit Rating Agency Limited
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Bazah Tul Qamar

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PACRA Maintains the Entity Ratings of Harappa Solar (Pvt.) Limited

Rating Type Entity
(10-Sep-21 )
(11-Sep-20 )
Action Maintain Upgrade
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Harappa Solar Private Limited an 18MWp Solar Power Plant – incorporated in September 2014, operates under the Renewable Energy Policy 2006. The Company opted for the upfront Tariff. Under the upfront Tariff regime, any variability in solar energy is to be borne by the Company, due to which its cash flows may face seasonality. The ratings, take into account sound profile of sponsors having considerable experience in establishing green-field projects in power and industrial sectors and also operating a portfolio of solar projects. A long-term energy purchase agreement of 25 years with CPPA-G, mitigating the underlying business and economical risk factors, along with sovereign guarantees on power purchaser’s payment obligation, also contribute positively towards the ratings. Ratings incorporate adherence to performance benchmarks through power generation, underpinned by healthy cash flows generation. Short-term borrowing levels also reflect a need to oversee the working capital management. The Company has availed both foreign and local loan to finance the debt. Foreign loan, covered through SBLC from local financial institutions, is availed from ECO Trade and Development Bank Turkey. The local loan is received from The Bank of Punjab, Pak Oman Investment Company and Askari Bank Limited. The Company is required to maintain DSRA equivalent to two debt repayments under financing documents, the Company is funding DSRA from SBLC. The Company has repaid 29% of foreign loan and ~35% of local loan has been repaid, by which the debt equity ratio comes to 66%.
Upgrading operational performance in line with agreed performance levels is important. Improvement in inflows and availability of unutilized credit limit remained congenial for the ratings.

About the Entity
Harappa Solar, incorporated in September 2014, is a Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by AEDB. The Company achieved financial close in February 2017 and Commercial Operations in October 2017, whereby no liquidated damages were levied as the project was completed within stipulated time. The total cost of the project is USD 24.4mln. Debt financing constitutes 75% of the project cost i.e. USD 18.3mln, which is financed from local and foreign financial institutions in ratio of 55:45. Harappa Solar has been developed and supervised by experienced sponsors and management, who have also several renewable projects in their portfolio such as 50MWp Gharo Solar Limited, 8MWp Kathai-II Hydro Private Limited and experience of bagasse projects as well.
Harappa Solar is primarily sponsored by Mr. Rana Nasim Ahmed with 75% shareholding, other significant shareholders are Mr. Khaqan Babar Cheema (12%) and Windforce (Pvt.) Ltd (12.8%). Mr. Rana Nasim is a high net worth individual and is the major sponsor of 50 MWp Gharo Solar Limited as well. He has almost two decades of diverse managerial and operational experience in the sugar and power sectors. Mr. Khaqan Cheema is CEO and sponsor of Orient Cargo, a logistics Company, and Windforce is a renewable energy power generation Company from Sri Lanka. Harappa Solar’s Board of Directors (BoD) comprises eight members. Harappa Solar has been led by Chief Executive Officer – Rana Uzair Nasim, since its inception. He is assisted by a qualified management team with relevant industry experience.

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.