Lahore, VIS Credit Rating Company has reaffirmed the entity ratings of Zephyr Power Limited (ZPL) at ‘A+/A-1’ for medium to long-term and short-term credit quality, respectively. The ratings reflect the company's robust financial health and stable economic outlook, with the last assessment conducted on February 2, 2023.
According to VIS Credit Rating Company Limited, ZPL, which operates a 50 MW wind-based Independent Power Project (IPP) in Gharo, Thatta, Sindh, maintains good credit quality with moderate risks that may fluctuate due to economic conditions. The short-term ‘A-1’ rating indicates a high certainty of timely payment obligations due to excellent liquidity factors and strong protection factors. The outlook for these ratings is categorized as ‘Stable’.
ZPL benefits from the backing of a prominent primary sponsor—a Development Finance Institution wholly owned by the UK Government—along with a consortium of local partners. This support is complemented by a robust operational setup including a Debt Service Reserve Account (DSRA) and a long-term Energy Purchase Agreement (EPA) with CPPA-G, which assures off-take and timely payment for debt servicing. The operational risks are further mitigated by the experience of the O and M contractor who has an international track record and has met all obligations to ZPL thus far.
The report also mentions temporary challenges such as the closure of two wind turbines in FY23 that impacted operational performance. Despite this, ZPL is expected to recover the lost output from the O and M contractor. Financially, ZPL showed growth in revenue due to tariff adjustments, with both gross and net margins improving in the current year. The company's liquidity profile remains robust, supported by sound debt-servicing capacity and cash flow coverages.
Capitalization indicators have shown improvement, attributed to an expansion of the equity base. Future financial stability is expected to be supported by internal capital generation, repayment of financial obligations, and limited capital expenditure plans.