Karachi: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings for Zephyr Power Limited (ZPL) at 'A+/A1' (Single A plus/A One), maintaining a stable outlook. This decision reflects ZPL's good credit quality and strong likelihood of timely repayment of obligations, amidst an evolving economic landscape.

Incorporated in 2005 and transitioned to a public unlisted company in 2021, ZPL operates a 50 MW wind-based Independent Power Project (IPP) in Gharo, Thatta, Sindh. The project, interconnected by the National Transmission Despatch Company, benefits from an Energy Purchase Agreement with the Central Power Purchasing Agency, leveraging government-backed agreements established in 2017.

ZPL's ratings are supported by the medium-risk profile of Pakistan's renewable energy sector, bolstered by government policies like the 2019 Alternative and Renewable Energy Policy and the IGCEP 2047. These initiatives aim to increase renewable energy's share through reforms and competitive bidding. The sector benefits from favorable geographic conditions and international interest, though it faces challenges such as regulatory shifts and high capital costs.

The financial health of ZPL has seen improvements, with profitability buoyed by tariff indexation to inflation and exchange rates. Revenue stability is enhanced by long-term agreements, while capitalization metrics reflect strong debt management and equity growth. The company's liquidity remains robust, indicated by a healthy current ratio and improved debt servicing capacity.

VIS's reaffirmation of ZPL's ratings underscores the company's strategic positioning and resilience amidst sectoral and economic changes.