PACRA assigns ‘AA+’ rating for long term, A1+ for short term to NTDC

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Lahore:Pakistan Credit Rating Agency (PACRA) has assigned initial entity rating of ‘AA+’ for long term and A1+ for short term to National Transmission and Despatch Company (NTDC), while the outlook of NTDC is forecasted as ‘stable’ on the basis of this rating.

The spokesman said that another milestone has been achieved by NTDC, that the rating reflects the Company’s strategic importance in the Power Sector. NTDC is mandated to construct, maintain and operate an integrated network of transmission lines and grid stations of 220 kV and above to evacuate power from an installed generation capacity of over 36,000 MW.

The spokesman informed that NTDC’s low business risk emanates from its leading market position and strong uphold on transmission system in terms of its technical and business expertise. NTDC’s operational expenses being part of the tariff determination mechanism reflect positively on the Company’s risk profile and its business and growth prospects. It is worth mentioning that transmission losses of NTDC are aligned with the globally accepted parameters.

The spokesman said that ratings also take into account NTDC’s moderate financial risk originating from sizeable equity, sound capital structure which comprises mainly local financing as well as foreign loans (from multilateral agencies) are provided under relent loan policy with inherent protection against currency and foreign exchange risk.

Additionally, working capital management is a reflection of strong internal cash generation and effective management of circular debt by adjusting receivables with loans repayments on foreign loan. The ratings also incorporate NTDC’s strengthened position resulting through completion of 31 expansion projects. Power evacuation from Dasu Hydro Power Project, Diamer Basha Dam,870 MW Suki Kinari, 2160 MW Dasu Hydropower Project, 720 MW Karot Hydropower Project,CASA-1000 project and ± 660 kV HVDC Matiari-Lahore Transmission Line project are some of Company’s huge and magnificent projects in pipeline.

The spokesman further said that effective management of upcoming projects, in addition to ERP system implementation, consistency in financial profile and risk matrixes remains critical for the ratings. Meanwhile, reconciliation of outstanding adjustments regarding Business Transfer Agreements and sustained competitive positioning is also imperative.

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