PACRA Maintains the Entity Ratings of Saif Power Limited

Saif Power Limited (“SPL” or “the Company”) has been established to set up and operate, combined cycle dual fuel, 225 MW net power generation plant, for generation of electricity and onward sale of electricity to the Power Purchaser (CPPA-G). The plant achieved its commercial operations date (COD) on April 30, 2010. The ratings reflect strong business profile of the Company emanating from the demand risk coverage under 30-year Power Purchase Agreement (PPA) signed between CPPA-G and the Company starting from the COD. Meanwhile, the Implementation Agreement provides sovereign guarantee for cash flows, given adherence to agreed performance benchmarks. The Company continues to meet its performance benchmarks. Comfort is drawn from General Electric International Inc. (G.E) which is the Operations, Maintenance and Service (O&M) Contractor having both local and international experience in the energy sector. The primary fuel of the plant is Gas/Regasified Liquefied Natural Gas (RLNG) which is supplied by Sui Northern Gas Pipeline Limited (SNGPL) and HSD is the backup fuel. Thus, fuel supply risk is considered adequate, pertaining to the meaningful addition of RLNG in Pakistan’s fuel mix. During 9MCY23, SPL generated revenues of PKR ~17.6bln (9MCY22: PKR ~20.2bln; CY22: PKR ~22.9bln), resulting in a net income/(loss) of PKR ~ (25) mln (9MCY22: PKR ~1.8bln; CY22: PKR ~1.95bln). In previous years, SPL accrues overhaul expenses annually on the basis of operating hours of the plant. However, this was rectified in 2022 in the light of the opinion issued by ICAP. Thus resulted in overhaul cost of PKR 1.28bln. Additionally, finance costs increased to PKR ~1.8bln from PKR ~1.0bln in the same period of the previous year, contributing to the loss. SPL meets its working capital requirements through a combination of short-term borrowing and internal cash flows. As of the end of Dec’23, SPL had arranged working capital lines totaling PKR ~19.33bln, with 60% (PKR ~11.6bln) have been utilized. Moreover, Saif Power successfully settled its project-related debt in March’20.
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 ability to continue with this practice. Furthermore, going forward delay in receiving the amounts from power purchaser remains a cause of concern. However, the management ably supported by sponsors’ 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 (~23%) stake, is the majority shareholder of the Company followed by sponsor family (~27%), 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.