PACRA Maintains Entity Ratings of ACT Wind (Pvt.) Limited

Tapal, Ismail and Akhtar groups has set up a 30MW wind power plant - Act Wind (Pvt) Limited (“Act Wind” or “the Company”) in Jhimpir, under the Policy for Development of Renewable Energy for Power Generation, 2006 which offers a guaranteed internal rate of return, cost indexation, and pass-through tariff structure. The project revenues and cash flows are exposed to two main risks. First; wind risk. Under the upfront tariff regime, any variability in wind speeds is to be borne by the Company, due to which its cash flows may face seasonality. Second; operational risk. The Company has to maintain the plant’s capacity factor at 31% annually, and is ready to deliver electricity to CPPA-G, CPPA-G is liable to pay the whole tariff even if no purchase is done. Comfort is drawn from HydroChina – the O&M operator – having both international and local market experience. The Company has adequate insurance coverage. During the period, 6MFY24 Act wind recorded sales revenue of PKR ~1,667mln against the sales of PKR ~678mln in the corresponding period (6MFY23). The Company posted a Net Profit of PKR ~768mln in 6MFY24 as compare to the Loss of (PKR ~58.9mln) in 6MFY23. The company’s profitability metrics decline in FY23 due to reduced operational performance caused by government led curtailments and lower wind resources. However, profits and generation rebounded during the current fiscal year owing to better offtake from the Government and improved wind speed. The overall liquidity profile remained robust, with timely receivables collection from CPPA. Working capital requirements of The Company are fulfilled through in-house adequate cash flow generation, without any utilization of short term borrowing lines. Free cash flows of the Company are in a comfortable position to make timely debt repayments. Act Wind has repaid over ~75% of its debt on time without availing benefit of forbearance period, facet of strong financial profile and working capital management.
Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels remain key rating drivers. The company’s repayment behavior, from internally generated cashflows, would be considered positive for ratings.

About the Entity
ACT Wind (Private) Limited incorporated in December 2010, is a Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by the Alternative Energy Development Board (AEDB). Debt financing constitutes 75% of the project cost i.e., PKR 6,008mln. It is priced at 3M Kibor plus 3% p.a. The debt has a ten-year repayment period, commenced on Apr'17, with payments to be made in twenty consecutive semi-annual instalments. The sponsors of the Company, with equal shareholding, are Tapal Group, along with Ismail Power (Private) Limited (IPPL) and Akhtar Power (Private) Limited (APPL), who merged together in August 2013 to set up the wind power plant.
ACT’s board comprises nine members, including the CEO. Each group has three representatives on the board. Mr. Maqsood Ismail is currently the Chairman of the board. Mr. Adnaan Tapal, an electrical engineer, is the CEO of ACT since September 2011. He is supported by experienced individuals. The Chairman and CEO shall be nominated and elected after every two years. However, the CEO and Chairman can hold the position for longer period with mutual consent of board members.