Karachi: K-Electric Limited's Sukuk 5 has maintained its high credit rating of AA+ by VIS Credit Rating Company Limited, reflecting strong protection factors and modest risk, according to a recent announcement. The outlook on these instrument ratings remains stable, with no change since the last rating action in June 2024.

According to a statement by VIS Credit Rating Company Limited, the reaffirmation recognizes K-Electric's stable cash flow position and debt profile, despite delays in regulatory approvals for tariffs by the National Electric Power Regulatory Authority (NEPRA). While the Generation Tariff has been approved, individual tariffs for transmission, distribution, and supply are still pending, affecting the finalization of financial statements post-FY23.

K-Electric, a Karachi-based electricity provider, is actively working with NEPRA to expedite the approval process for these tariffs. The company has been in operation since 1913, with its shares publicly traded on the Pakistan Stock Exchange Limited. KES Power Limited, incorporated in the Cayman Islands, is the majority shareholder, holding a 66.40% stake in the company.

The management of K-Electric anticipates a rise in debt levels once the Multi Year Tariff (MYT) is finalized and aligned with the company's future investment strategies. Nevertheless, the existing Master Collection Account structures are expected to support timely debt servicing.

The ratings will continue to be influenced by the timely approval of the MYT and its alignment with investment plans. Maintaining stable cash flows and adherence to financial covenants will be crucial, as will the ability to sustain operational and financial metrics in a changing regulatory landscape.