Lahore, June 23, 2023 (PPI-OT): Tapal, Ismail and Akhtar groups has set up a 30MW wind power plant - Act Wind (Pvt) Limited (“Act Wind” or “the Company”) in Jhimpir, under the Policy for Development of Renewable Energy for Power Generation, 2006 which offers a guaranteed internal rate of return, cost indexation, and pass-through tariff structure. The project revenues and cash flows are exposed to two main risks. First; wind risk. Under the upfront tariff regime, any variability in wind speeds is to be borne by the Company, due to which its cash flows may face seasonality.
Second; operational risk. The Company has to maintain the plant’s capacity factor at 31% annually, and is ready to deliver electricity to CPPA-G, CPPA-G is liable to pay the whole tariff even if no purchase is done. Comfort is drawn from HydroChina - the O and M operator - having both international and local market experience. The Company has adequate insurance coverage. During the period, 6MFY23 and FY22, Act wind recorded sales revenue of PKR ~678mln and PKR ~2,125mln along with a Net Loss / Profit of PKR ~ (59) mln and PKR ~905mln respectively. The loss in 6MFY22 representing the generation below the agreed benchmark of 31% owing to lesser wind speed, though the liquidity of the company remains in comfortable position to service its debt obligation timely.
Working capital requirements of Act Wind are fulfilled through in-house adequate cash flow generation, without any utilization of short term borrowing lines. Free cash flows of the Company are in a comfortable position to make timely debt repayments. Act Wind has repaid ~70% of its debt on time without availing benefit of forbearance period, facet of strong financial profile and working capital management. During FY22 the Company has paid dividend to its sponsors reflecting strong equity base.
Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels remain key rating drivers. The company’s repayment behaviour, from internally generated cashflows, would be considered positive for ratings.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
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Lahore, Pakistan
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Email: hammad.rashid@pacra.com
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