Lahore, March 17, 2022 (PPI-OT): Lucky Electric Power Company Limited (Lucky Electric) is setting up a 1x660MW (gross) local coal fired power plant. Its COD as per PPA was 1st March, 2021, but delayed due to non-availability of interconnection lines. The transmission lines have become available in November 2021; after which the Company has obtained certificate of Readiness of synchronization. So, the management is now expecting COD by March 20, 22, and is therefore not exposed to any material amount of liquidity damages. The key rating consideration is an explicit undertaking from the sponsor to ensure that all kind of support including financial shall be made available.

The ratings also take into account the project exposure to completion risk. The primary fuel is Thar Coal; a coal supply agreement is signed with Sindh Engro Coal Mining Company (SECMC), from its Block-II (Phase III). Company has also signed imported coal supply agreements with reputable coal suppliers. Plant would be run on imported coal in case of non-availability of local coal. Once completed, the Company’s main challenge would be to keep the plant operational. Lucky Electric’s capital structure comprises 25% equity and debt financing constitutes 75% of the initial estimated project cost; ~USD 883mln, financed from local and foreign financial institutions.

Local currency facilities have been obtained from multiple consortium of banks aggregating to PKR 65.95bln and have a 10 year tenure starting June 2022 and to be paid in 40 quarterly installments. The facilities remained ~95% utilized at March 10, 2022. The foreign facility is USD 210mln. Out of which USD 20mln (fully drawn down) will be paid quarterly and USD 190mln, (Drawdown: ~93%) will be paid semi-annually. Off take agreement is with CPPA-G, which will, upon plant’s availability as per contract, provide capacity payments even if no purchase order is placed. Currently commissioning is in progress and expected to be completed by 3rd week of March 2022.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com