PACRA Maintains Entity Ratings of Kohinoor Energy Limited

The ratings incorporate the strong business profile of Kohinoor Energy Limited (Kohinoor Energy), primarily supported by the demand risk coverage under the Power Purchase Agreement (PPA) executed between the Power Purchaser and the Company. As part of government IPP renegotiation initiative, the Company consented to amendments in the PPA proposed by the government’s task force aimed at restructuring tariffs for Independent Power Producers (IPPs). Under these amendments, the existing tariff structure has been transitioned to a “Hybrid Take-and-Pay” model. The revised framework is designed to reduce the plant’s capacity tariff while extending the term of the PPA by 161 days from June 20, 2027 to November 27, 2027. Furthermore, the Company has agreed to waive the outstanding delayed payment interest charged to Central Power Purchasing Agency (Guarantee) Limited up to October 31, 2024. Resultantly, the overdue receivables has been paid by the power purchaser, enhancing the Company’s liquidity position. Considering the plant’s strategic location and its significance in supplying power to the surrounding industrial area as well as the national grid, the task force opted not to terminate the PPA, unlike certain other IPP arrangements, to ensure continued plant availability for system demand management. The plant’s generation levels remain dependent on the demand dispatched by the Power Purchaser from the facility. Given the approaching expiry of the Company’s existing contractual tenure, the management is evaluating various strategic options, including potential participation in the government-proposed Competitive Trading Bilateral Contracts Market (CTBCM) framework, along with exploring diversification avenues. During FY25, the dispatch of electricity was lower than that of the previous financial year. Therefore, the power plant, by operating at 7.01%, delivered 76,156 MWh of electricity as compared to the 19.06% capacity factor (207,615 MWh) delivered during the previous financial year. This decrease in generation is mainly attributed to the shift of electricity demand towards a less expensive source of generation, i.e., Hydro, local coal, Solar, Wind, and Biogas from the power purchaser in the wake of a cost-effective energy basket. Kohinoor Energy continues to meet its availability and efficiency benchmarks—an outcome of a technically sound O&M team, robust systems, and controls. As of the end of December 2025, leveraging stood at 16%, representing short-term borrowing only. There is adequate cushion available to the company to meet its working capital requirement in its approved STB limits. The ratings stemmed from the fact that the long-term debt of the company was fully paid successfully in June 2008
The ratings continue to take comfort from Kohinoor Energy's association with Saigol Group. Furthermore, the plant's successful operations while meeting its required benchmarks contribute towards the assigned ratings. Although the amended PPA is proposed to provide a tariff discount, sound liquidity position and complete payment of long term debt provide comfort. Going forward, the ratings remain susceptible to the expiry of the PPA and future of the plant operations.

About the Entity
Kohinoor Energy Limited, an independent power producer (IPP), commissioned its plant under Power Policy 1994. With a total cost of US$ 138.8mln and a capacity of ~131 MW (dependable capacity of 124 MW), the company started its commercial operations in June 1997. Kohinoor Energy is listed on the Pakistan Stock Exchange. The principal shareholder of the company is the Saigol family (62%). The remaining shareholding (~38%) is widely dispersed. The BoD comprises seven members, including the Chief Executive Officer. The chairman, Mr. Naseem Saigol, is a renowned businessman with diverse experience in various sectors. The board has been actively involved in providing strategic guidance to the company and implementing a strong internal control framework. Mr. Muhammad Zeid Yousaf Saigol is the Chief Executive Officer who is leading the Company's Power Division Operations.