PACRA Maintains the Entity Ratings of Master Green Energy Limited

Master Group, a pioneer in foam products in Pakistan, ventured into the renewable energy sector with the successful launch of its first wind power project, Master Wind Energy Limited, located in Jhimpir, Sindh. Building on this success, the Group installed its second 50MW wind power project under the banner of Master Green Energy Limited (MGEL) in District Jamshoro, Sindh. The project commenced construction in September 2019 and achieved its Commercial Operations Date (COD) in August 2021.MGEL has entered into a 25-year Energy Purchase Agreement (EPA) with Central Power Purchasing Agency Guarantee Limited (CPPA-G). Under this agreement, the power purchaser is obligated to pay for any non-project missed volumes at the applicable tariff rate. The Company operates under a cost-plus tariff regime, as awarded by NEPRA, with energy payments secured through CPPA-G, backed by the sovereign guarantee of the Government of Pakistan. The project’s revenues and cash flows are primarily exposed to wind risk and operational risk. While wind variability is borne by the Company—introducing seasonality in cash flows—operational risks are mitigated through adherence to performance benchmarks for availability and efficiency, as outlined in the EPA. The EPC contract was awarded to Hydro China International Engineering Company Limited and Hangzhou Huachen Electric Power Control Company. The Company has secured long-term Operations and Maintenance (O&M) agreements with Siemens Gamesa Renewable Energy Pvt. Limited (Operator A) and Albario Engineering Pvt. Limited (Operator B), whose international and local experience provides added operational reliability. As of 9MFY25, MGEL delivered 67.56 GWh of electricity to the national grid. However, consistent low wind speeds throughout the period resulted in lower-than-expected generation, thereby exerting pressure on the Company’s financial matrix. To support its working capital requirements, the Company has access to short-term borrowing facilities and utilized PKR 100mln in March 2025. As of March 2025, MGEL has repaid fifteen installments of its project-related long-term debt in a timely manner, without any forbearance period. Although the Company’s leverage remains sizable, it is expected to gradually reduce in line with the project’s life cycle. Debt service coverage has remained marginal. However, comfort is drawn as the Company has maintained a standby letter of credit (SBLC) equal to two quarterly installments for the entire loan term as per financing agreements.
The Rating Watch highlights the stress on margins resulting from persistently low wind speeds. Any further decline that impacts the Company's ability to service debt efficiently will be a critical consideration. However, historical patterns along with the expectation of sponsor support, if needed, offer comfort remain important factors in holding the current rating.

About the Entity
MGEL is part of the Master Group, a diversified industrial conglomerate with over 50 years of history, originating with Master Enterprises (Pvt.) Ltd in 1963—pioneers in Pakistan’s foam industry. The Group has since expanded into textiles, engineering, automobiles, and retail. MGEL’s project cost totaled USD 65.03mln, financed 80% through debt (USD 52mln) from local and international institutions. The Company is led by CEO Mr. Shahzad Malik, overseeing the Group’s energy ventures, and COO Mr. Rumman Arshad Dar, who brings 22+ years of experience in energy and transaction advisory.