Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has updated the short-term entity rating of Liberty Wind Power 1 Limited (LWP1), a company that operates a 50-megawatt wind power plant in Jhimpir, Sindh. The plant operates under a 25-year Energy Purchase Agreement with the Central Power Purchasing Agency-Guarantee Limited, which ensures assured offtake and stable revenue streams.
According to The Pakistan Credit Rating Agency Limited, the project, with an approved cost base of USD 62.36 million and a levelized tariff of PKR 8.1272 per kWh, provides long-term financial stability by ensuring the recovery of approved costs along with a defined margin. The tariff mechanism supports predictable cash flows, while ownership by Liberty Mills Limited, a core entity of the Liberty Group, enhances financial and operational oversight.
In fiscal year 2025, LWP1 generated 126 GWh of power compared to 155 GWh in fiscal year 2024, due to variations in wind resource availability. Consequently, revenues declined to PKR 1.9 billion from PKR 2.5 billion. Despite the lower output, cash flow remained adequate with funds from core operations amounting to PKR 1.43 billion against finance costs of PKR 0.70 billion. The company maintains sound liquidity and manages working capital primarily through internal cash generation with minimal reliance on external borrowings.
The short-term rating upgrade follows a recent tariff true-up determination by NEPRA, enhancing visibility over approved project costs and strengthening recovery mechanisms through indexation of operational and maintenance expenses, exchange rate movements, and debt-servicing components. This reduces regulatory uncertainty and supports future cash flow stability. The company's predictable cash flow profile, strong sponsorship, comfortable liquidity, and adherence to scheduled debt servicing further bolster the ratings.
Looking ahead, the ratings will continue to be supported by LWP1's contracted revenue structure, predictable cash flows, and defined debt repayment schedule. The ratings will also rely on continued operational performance, financial discipline adherence, and a stable regulatory environment governing tariff recovery mechanisms.