Muhammad Mubashir Nazir
PACRA Maintains Entity Ratings of Din Energy Limited
Din Energy Limited (DEL) has set up a 50MW wind power plant “Din Energy Limited” in Jhampir. DEL is awarded upfront tariff, with the payments to be received from CPPA-G backed by the sovereign guarantee. DEL has signed Energy Purchase Agreement ("EPA") with CPPA-G for a period of 25 years from the date of COD, 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 plant successfully achieved its Commercial Operations (COD) On March 27, 2022 and has been supplying electricity to the national grid since then. The Company has adequate insurance coverage to cover the risk of business interruptions, marine & erection etc.
During the period, FY23, DEL generated approx. 144Gwh of electricity and recorded topline of PKR ~1,973mln, with a Net Profit of PKR ~329mln respectively, being the first year of its operation. Working capital requirements of the Company are fulfilled through mix of in-house adequate cash flow generation and short-term borrowing lines. Utilization of which remain approx.50 % as of June 2023. Free cash flows of the Company are in a comfortable position to make timely debt repayments. The Project is maintaining the Debt Service Reserve Account (DSRA), which is backed by 6 months SBLCs, in total providing coverage of six months on its financial obligations till maturity. The leveraging of DEL is yet sizeable and will gradually decline along with the life of the project as the repayment of project-related loan has started. The project revenues and cash flows are exposed to wind risk, there is seasonal variation in the wind speed which affect the electricity generation, and ultimately cash flows may face seasonality.
Management has put forth the requisition for true up tariff to NEPRA, for the final determination, the decision of which is pending. Upgrading operational performance in line with agreed performance levels is important. Improvement in inflows, timely repayment of project debt and availability of unutilized credit limits remained congenial for the ratings.
Din Energy Limited, was incorporated On July 02, 2014 is Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by AEDB. DEL is majorly owned by Din Group. The total estimated cost of the project is USD 63.91mln. Debt financing constitutes 80% of the project cost i.e. USD 51.12mln, which is financed from foreign financial institutions and locally from SBP under re-financing scheme at 3MKIBOR plus 1.75%. The foreign facility has tenor of thirteen years with two years grace period and quarterly repayments while the local loan has tenor of ten years with 2 years of grace period. Din Energy Limited has four-member board of directors with all members belonging to the DIN Group, which is principally engaged in the textile and real estate sector. Mr. Shaikh Muhammad Pervez currently chairing the Board. Mr. Fawad Jawed is the CEO, has been associated with the Group in different capacities, leading DEL with his visionary leadership. The management team comprises qualified and experienced professionals.