Lahore, December 20, 2021 (PPI-OT):The Water and Power Development Authority of Pakistan (WAPDA) is in the process of the construction of the DASU hydropower project (Dasu). Dasu, once completed would become the second-largest hydel project in Pakistan. Dasu stage 1 (2,160 MW) is expected to complete by 2023 with a cost of PKR 510.980bln (USD ~3.179bln). For partial financing of the project, WAPDA is issuing debt instruments worth PKR 88bln (TFCs: 35.2bln, Sukuks: 52.8bln) in multiple tranches. For this purpose in May 2017 first tranche of debt instruments has been issued while the second tranche has been issued in Jul 2021.
The ratings of PPTFCs (Tranche 1: PKR 10bln, Tranche 2: PKR 4.235bln) and Sukuks (Tranche 1: PKR 15bln, Tranche 2: PKR 6.353bln) reflects an unconditional and irrevocable guarantee by the Government of Pakistan (GoP). The guarantee covers the payment of the total outstanding amount of the instruments and related profit components. GoP would pay the entire called amount immediately upon receiving a demand notice from the trustee.
Additionally, WAPDA is maintaining a debt payment account (DPA) under the exclusive lien of the trustee. Within the first fifteen days of each month, WAPDA deposits an amount equal to 1/6th of the upcoming installment in the DPA. The rating apart from a debt payment and guarantee mechanism recognizes WAPDA’s strategic importance as the major hydroelectric power supplier to the country. WAPDA generated 32,295GWh electricity in FY20. WAPDA expects to generate an additional ~8,070MW by the completion of new hydel projects in the next four years.
WHE’s financial profile draws comfort from strong cash flows. However, it remains dependent on repayment behaviour of power purchaser. Continued compliance with the predefined covenants of PPTFC, including maintenance of DPA would remain critical. The watch has been removed since the audited financial statements of the issuer for FY20 are now obtained along with the auditor’s report.
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