PACRA Assigns Preliminary ‘AA’ Rating to Lucky Electric Power’s New Sukuk Issue

Karachi, The Pakistan Credit Rating Agency Limited (PACRA) has assigned a preliminary long-term rating of 'AA' and a short-term rating of 'A1+' to Lucky Electric Power Company Limited's (LEPCL) forthcoming sukuk issuance, PPSTS-18, valuing PKR 7 billion, indicating a stable outlook.

According to The Pakistan Credit Rating Agency Limited, LEPCL, a subsidiary of Lucky Cement Limited, has demonstrated operational success with its 1x660MW coal-fired power plant, which commenced commercial operation in March 2022. The company, backed by coal supply agreements with both local and international suppliers, including Sindh Engro Coal Mining Company (SECMC), has shown robust financial performance, posting a topline of approximately PKR 54 billion and a bottom line of about PKR 9.1 billion for the first half of fiscal year 2024.

LEPCL is in the process of issuing the PPSTS-18 sukuk as a financial instrument to replace the maturing PPSTS-14, aimed at fulfilling the company’s working capital needs. The sukuk, with a six-month tenor, is expected to maintain operational liquidity and financial stability, benefiting from the operational experience of its O and M contractor, Harbin Electric International Co., Ltd. (HEI) and the financial backing of the Yunus Brothers Group.

The rating reflects LEPCL’s strong position in the energy sector, supported by its experienced management and strategic partnerships. However, challenges such as currency devaluation, supply chain disruptions, and tariff adjustments are being monitored, with strategies in place to manage working capital effectively. The offtake agreement with CPPA-G, guaranteed by the Government of Pakistan, provides a stable revenue outlook for LEPCL.