Karachi: The VIS Credit Rating Company Limited has reaffirmed the entity ratings of K-Electric Limited at AA/A1+, signifying a stable outlook and high credit quality. The reaffirmation reflects strong protection factors and a modest risk that may vary with economic conditions. The short-term rating of A1+ indicates the strongest likelihood of timely repayment of short-term obligations due to outstanding liquidity factors.

According to a statement by VIS Credit Rating Company Limited, the ratings take into account the approval of the Generation Tariff, while approvals for Transmission, Distribution, and Supply tariffs from FY24 to FY30 are still pending with NEPRA. The completion of the Multi-Year Tariff (MYT) is contingent upon these individual tariff approvals, affecting the finalization of K-Electric's financial statements post-FY23.

K-Electric, incorporated in 1913 and listed on the Pakistan Stock Exchange, is engaged in generating, transmitting, and distributing electricity. The company, largely owned by KES Power Limited with a 66.40% stake, faces an anticipated increase in debt levels aligned with future investment plans. The company has stated that existing structures for servicing long-term debt will support timely debt repayment.

The ratings will be sensitive to the MYT's finalization and alignment with K-Electric's investment plans. Maintaining stable cash flows, debt servicing capabilities, and compliance with financial covenants will be crucial. The sustainability of operational and financial metrics amidst regulatory changes will also be significant for future ratings evaluations.