Karachi: The Neelum Jhelum Hydropower Project has experienced a complete operational halt since May 1, 2024, due to significant damage in the headrace tunnel, as reported by VIS Credit Rating Company Limited. Despite this setback, the instrument ratings of Neelum Jhelum Hydropower Company (Pvt.) Limited remain at ‘AAA’ with a stable outlook, reflecting robust financial strategies to manage ongoing liabilities.

According to VIS Credit Rating Company Limited, the shutdown, expected to last up to 18 months for repairs, has prompted the company to assure continued debt servicing through guaranteed receivables from the Central Power Purchasing Agency (CPPA). This assurance is backed by sovereign guarantees that underpin the company’s financial obligations, including recent confirmations that all principal and interest payments are up to date as of June 2024.

The resilience of the company’s ratings also stems from the unconditional and irrevocable first demand guarantee from the Government of Pakistan, covering both the issue amount of the Sukuk and its profit payments. Additionally, the Water and Power Development Authority (WAPDA), the parent entity, bolsters the company with strong financial support through equity injections and funding assistance, ensuring that Neelum Jhelum Hydropower can maintain its high credit standing even during extended periods of operational inactivity.