The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Assigns Initial Entity Ratings to Gul Ahmed Wind Power Limited

Rating Type Entity
(28-Sep-23 )
Action Initial
Long Term A+
Short Term A1
Outlook Stable
Rating Watch -

Gul Ahmed Wind Power Limited (GAWPL) has set up 50 MW wind power plant - GAWPL located in Jhampir, District Thatta, Sindh, Pakistan. GAWPL is awarded a upfront tariff, with the payments to be received from CPPA-G backed by the sovereign guarantee. The project achieved financial close (FC) in March 2015. The plant successfully achieved its Commercial Operations (COD) in October 2016 and has been supplying electricity to the national grid since then. Comfort is also drawn from its association with strong sponsors including Gul Ahmed Energy, InfraCo Asia Indus Wind and IFC having relevant experience in energy sector, this is the key consideration in the assigned rating. The Company has signed Energy Purchase Agreement ("EPA") with CPPA-G, as per the EPA, in case of non-project missed volumes, the power purchaser shall be liable to pay the missed volumes calculated using tariff rates. The Company has adequate insurance coverage to cover the risk of business interruptions. GAWPL signed an O&M contract with Nordex Pakistan Private Limited and Descon Engineering Limited in September 2014. The Company has long term project debt that is repayable in a period of ten years out of which approximately ~62% of foreign and ~40.2% of local debt has been paid as of FY-23. Further, the company is maintaining the Debt Service Reserve Account (DSRA), which is filled by internal cash generation and provides debt coverage of approximately 7 months on its financial obligations till retirement of debt. Currently the Company managing its working capital through internal cash generation and a sound liquidity is available on the balance sheet of the Company in the form of liquid investments of approximately ~PKR 4.5bln. FCFO’s for June’23 stood at PKR 4,221mln while total receivables were recorded at PKR 4,593mln. Company has generated 90.63 GWh electricity in FY-23. The project revenues and cash flows are exposed to wind risk, there is seasonal variation in the wind speed which effect the electricity generation, and ultimately cash flows may face seasonality. However, historical wind speeds provide comfort that GAWPL would be able to generate enough cash flows to keep its financial risk manageable.
External factors such as any adverse changes in the regulatory framework may impact the ratings. Going forward, the capacity of the Company to generate stable cash flows in order to make timely repayments against the project debt remains crucial. With rising concerns about circular debt, the trend of payments received from CPPA-G against invoices will further impact ratings.

About the Entity
Gul Ahmed Wind Power Limited, incorporated in March 2008, is a Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by AEDB. The 50MW wind IPP is set up in Jhampir, District Thatta, Sindh. Mr. Danish Iqbal is the CEO of the company. Mr. Danish has been associated with the company since its inception and thus has vast experience. The cost of the project is USD 125.599mln. Debt financing constituted 75% of the project cost i.e., USD 93.851mln, which is financed from foreign as well as local financial institutions.

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.