Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Liberty Daharki Power Limited at A+/A1. The medium to long-term rating of ‘A+’ reflects adequate protection factors, while the short-term rating of ‘A1’ indicates a strong likelihood of timely repayment of obligations. The outlook remains stable.

According to a statement by VIS Credit Rating Company Limited, the previous ratings action for Liberty Daharki Power Limited, formerly known as TNB Liberty Power Limited, was announced on November 29, 2023. Established in 1995 as a public limited company, LDPL operates a combined cycle power station with a capacity of 235 MW in Ghotki, Sindh, selling electricity to the Central Power Purchasing Agency Guarantee Limited.

The assigned ratings account for the business risk profile of the company, reflecting the medium to low industry risk of Pakistan’s non-renewable power production sector. Demand for electricity remains stable, driven by urbanization and population growth. The regulated framework under NEPRA plays a significant role in overseeing tariffs, licensing, and compliance, impacting operational dynamics and profitability.

The ratings also consider the company’s low business risk profile, supported by a Purchase Power Agreement with CPPA-G that includes a ‘take or pay’ clause, reducing off-take risks. The PPA, backed by a sovereign guarantee, was initially set to expire in 2026, but an amendment agreement signed in 2024 extends it to March 2028.

Financially, LDPL’s profile includes revenue from a two-tier tariff structure and investments that diversify cash flow sources. The company’s capitalization remains stable with limited obligations, and liquidity is supported by strong revenue flows and low debt levels. Advances to related entities could yield potential returns in the future.

Looking ahead, the continuation or renewal of the PPA, the level of tier 2 energy dispatch, and net returns from investments will influence the ratings. The finalization of the Gas Supply Agreement for a sustainable gas supply beyond the current PPA’s term will also be a critical factor.