PACRA has maintained Kohinoor Energy Limited‘s long-term rating at AA and short-term rating at A1+ with a stable outlook, reflecting the company’s strong business profile and solid operational performance despite recent amendments to its Power Purchase Agreement (PPA). The ratings underscore the company’s resilience amid ongoing energy sector reforms.
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The ratings are primarily supported by robust demand coverage under its PPA with the Central Power Purchasing Agency (Guarantee) Limited, as well as the plant’s strategic importance in supplying electricity to both the national grid and surrounding industrial areas.
PPA Amendments and Tariff Restructuring
As part of the government’s Independent Power Producer (IPP) renegotiation initiative, Kohinoor Energy agreed to amendments in its PPA under the task force’s proposed tariff restructuring. Key changes include:
- Hybrid Take-and-Pay Model: The revised PPA introduces a new tariff structure
- Capacity Tariff Reduction: Lower capacity payments
- Contract Extension: Additional 161 days, from June 20, 2027, to November 27, 2027
- Delayed Payment Interest Waiver: Outstanding interest up to October 31, 2024, waived
Financial Strengths
The company’s financial position remains robust:
- Long-term Debt: Fully repaid in June 2008
- Leverage: 16% as of December 2025 (short-term borrowing only)
- Liquidity: Strengthened by clearance of overdue receivables
- Working Capital: Sufficient cushion within approved limits
- Sponsor Support: Strong backing from Saigol Group
Operational Performance
During FY25, Kohinoor Energy operated at a 7.01% capacity factor, producing 76,156 MWh of electricity compared to 207,615 MWh (19.06% capacity factor) in the previous financial year. This decline is primarily attributed to the shift of electricity demand toward lower-cost sources, including hydro, local coal, solar, wind, and biogas, under a cost-effective energy basket strategy by the power purchaser.
Despite reduced dispatch, Kohinoor Energy continues to meet operational availability and efficiency benchmarks, supported by a technically sound operations and maintenance team, robust systems, and controls.
Future Outlook
Looking ahead, ratings remain sensitive to the expiry of the PPA and the future operational strategy of the plant. Management is actively exploring strategic options, including:
- Potential participation in the government’s Competitive Trading Bilateral Contracts Market (CTBCM) framework
- Diversification avenues to maintain sustainable growth
The amended PPA, while offering tariff adjustments, is cushioned by the company’s strong liquidity and sound operational performance, supporting the current ratings.
About Kohinoor Energy Limited
Kohinoor Energy Limited is an independent power producer operating a power plant in Punjab, Pakistan. The company is part of the Saigol Group, a diversified business conglomerate with interests in energy, textiles, and other sectors.
About PACRA
The Pakistan Credit Rating Agency Limited (PACRA) is one of Pakistan’s leading credit rating agencies, providing independent assessments of creditworthiness for corporations, financial institutions, and government entities.
