PACRA Assigns Initial Entity Ratings to Oursun Pakistan Limited

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PACRA Assigns Initial Entity Ratings to Oursun Pakistan Limited

March 1, 2019

Lahore, March 01, 2019 (PPI-OT): Oursun Pakistan Limited (Oursun Pakistan), 50MWp – incorporated in May 2015, operates under the Renewable Energy Policy 2006. The company achieved financial close in June 2017, while funds released from banks in December 2017 owing to financing approvals pending from State Bank of Pakistan. The rating incorporates commissioning of plant, achieved on 30th November 2018. The company opted for upfront tariff. Under the upfront tariff regime, any variability in solar energy is to be borne by the Company, due to which its cash flows may face seasonality.

The company signed Energy Purchase Agreement with Karachi Electric Limited for a period of 25 years. O and M contract signed with OMS (Pvt.) Limited for a period of two years. Unlike other IPPs, where GoP has provided a sovereign guarantee against dues from CPPA-G, Oursun Pakistan as per EPA shall sell and deliver and the Purchaser shall accept all of the net delivered energy generated by the Complex and delivered to the Purchaser at the Interconnection Point, and the Purchaser shall pay. However, the Company’s ability to manage contracted parameters over multiple solar cycles is yet to be seen.

The company has availed both foreign and local loan to finance its debt component. Foreign loan is availed from United National Bank Limited (UK). Local loan is received from United Bank Limited (lead arranger), The Bank of Punjab and Askari Bank Limited. The company is required to maintain DSRA equivalent to two quarterly debt repayments under financing documents; this requirement is being met by mix of cash deposit and SBLC from sponsors. Going forward, the company plans to fund DSRA from internal cashflows.

Upholding operational performance in line with agreed performance levels is important. Build-up of DSRA from internal sources, receipt pattern from power purchaser, debt repayment behaviour and liquidity cushion would impact the direction of ratings. External factors such as any adverse changes in the regulatory framework and weakening of financial profile may impact negatively.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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