Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
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PACRA assigns Initial rating to WAPDA Dasu Sukuk-E
Rating Type | Debt Instrument | |
Current (26-Sep-24 ) |
||
Action | Initial | |
Long Term | AAA | |
Short Term | - | |
Outlook | Stable | |
Rating Watch | - |
The Pakistan Water and Power Development Authority ("WAPDA") has issued last tranche of Sukuk worth PKR 10,094mln in May'24. WAPDA will utilize this amount to partially finance the construction of the Dasu hydropower project Stage-I ("Dasu"). Dasu, once completed would become the second-largest hydel project in Pakistan. Dasu is a run of river project on the Indus River located in Dasu Kohistan, Khyber Pakhtunkhwa about 350 KM from Islamabad. The project started in 2017 and is expected to be completed in May'27. The project will be completed in two stages, the installed capacity would be 4,320MW (stage-I 2,160MW) and the total annual energy of 21,485 GWh will be produced (Stage-I 12,220 GWh). Stage -I project includes the construction of a hydraulic structure on the Indus River and underground power generation facilities. The total land (5,031 acres) required for the project has been acquired. The Project would be financed through a mix of WAPDA internally generated cash (15%) and borrowing (85%) i) Long-term (local & foreign) ii) Bonds Issuance (Islamic & Conventional). Currently, the physical progress of the Project stands at ~21.86%, while financial progress stands at ~62.08%. Series E Sukuk is part of local financing facility package of PKR 144bln availed from the local syndicate bank for a period of 15 years, whereby PKR 52.8bln were to be raised in form of GOP guarantee backed Sukuk in total five tranches. Accordingly, WAPDA issued 5 Series (A, B, C, D and E) of Sukuk by aggregate amount of PKR 52.8bln. The assigned rating of Sukuk incorporates an unconditional and irrevocable guarantee by the Government of Pakistan (GoP) which has already been issued. The guarantee is covering the payment of the total outstanding amount of the Sukuk and the related profit component. GoP would pay the entire called amount immediately upon receiving a demand notice from the issue agent. Additionally, WAPDA has maintained a Debt Payment Account (DPA) with the Facility Agent which is held under an exclusive lien in favor of the Issue agent. During each month, WAPDA deposits an amount equivalent to 1/6th of the upcoming Installment into the DPA, so that the aggregate amount available in the DPA on the upcoming Installment Date is equal to the relevant upcoming Installment. WAPDA has generated a topline of ~PKR 38bln during 6MFY24 (FY23: ~PKR 75bln) and a bottom line of ~PKR 17bln during 6MFY24 (FY23: ~PKR 8bln).
WAPDA's financial profile draws comfort from strong cash flows. However, it remains dependent on the repayment behavior of the power purchaser.
About
the Entity
The Pakistan Water and Power Development Authority (WAPDA), was established through an act of parliament in February 1958 (WAPDA Act 1958) for the development and maintenance of water and power resources. WAPDA has 22 projects with a total hydel generation capacity of 9,389MW.
About
the Instrument
WAPDA issued a rated, secured, privately placed, Islamic certificate WAPDA Dasu Sukuk-E ("Sukuk") of PKR 10,094mln in May'24 to partially finance stage-1 of Dasu Hydropower Project. The Sukuk has a tenor of 8 years and carries a profit rate of 6MK + 1.45% p.a to be paid semi-annually in arrears. Sukuk will redeem after seventeen equal semi-annual installments.