Karachi: VIS Credit Rating Company Limited has reaffirmed the instrument ratings of K-Electric Limited's Sukuk 6 at AA+ (Double A Plus), maintaining a stable outlook. This rating indicates high credit quality with strong protection factors, though risks may fluctuate slightly due to economic conditions.

According to a statement by VIS Credit Rating Company Limited, the previous ratings action for K-Electric Limited was announced on June 03, 2024. K-Electric, incorporated in 1913 and listed on the Pakistan Stock Exchange, is engaged in the generation, transmission, distribution, and supply of electricity within its licensed areas. The company is majority-owned by KES Power Limited, which holds 66.40% of its shares.

The reaffirmation considers K-Electric's ongoing collaboration with NEPRA to expedite the approval of individual tariffs for transmission, distribution, and supply for the fiscal years 2024 to 2030. The full approval of the Multi Year Tariff depends on these tariffs, impacting the finalization of financial statements post-2023.

K-Electric's management reported a stable cash flow position and debt profile, with expectations to maintain this stability. The company anticipates an increase in debt levels following the alignment of the Multi Year Tariff with future investment plans. The existing Master Collection Account structures are expected to support timely debt servicing.

The ratings will continue to depend on the timely finalization of the Multi Year Tariff and its alignment with K-Electric's investment plans. The maintenance of stable cash flows, debt servicing capabilities, and adherence to financial covenants remain crucial under the evolving regulatory environment.