Renewable Projects, $2B Investment Plans for KHI: KE Receives AA/A1+ Rating

KE’s strong financial standing has been reaffirmed by VIS Credit Rating Company, which has maintained its AA/A1+ rating and has a stable outlook. The ‘AA’ (Double A) rating, which is a medium to long-term rating, is indicative of strong financial stability with a low risk of default. It signifies that an entity has strong protection factors and can reliably meet its financial obligations, though economic fluctuations may cause minor variations. For KE, this rating reflects its solid financial standing, effective debt management, and investor confidence, which is crucial for securing funding and executing long-term projects like its $2 billion investment plan. An A1+ rating in short-term credit ratings signifies a strong ability to meet financial obligations on time. It reflects outstanding liquidity, strong cash flow management, and minimal risk of default. The previous rating was announced in June 2024. The rating mechanism recognizes the timing of regulatory approvals as it plays a pivotal role in financial planning. Expedition of regulatory proceedings for timely tariff finalization remains essential for KE’s investment strategy, debt servicing, and sustainable operations in Pakistan’s evolving power sector. The strong credit rating was affirmed around the time when KE was also set to appear before NEPRA today for an important hearing regarding its 220MW Site Neutral Hybrid Project. This, being a unique project in Pakistan, has attracted the country’s lowest tariff bid of 3.09 cents/kWh submitted by JCM Power, a Canadian firm. This wind-solar hybrid project aligns with KE’s strategy to incorporate a 30% share of renewables in its generation capacity and lessen reliance on imported fossil fuels. According to the timeline, after receiving the project’s bid in August 2024, KE submitted the Bid Evaluation Report (BER) for regulatory approval the following month. The bid bond validity is set to expire soon, and regulatory approval will help set the ground for the execution of these renewable energy projects. Earlier in December 2024, NEPRA held a hearing on KE’s 150 MW solar projects in Bela and Winder. KE’s renewable energy efforts involve the development of 640 MW of projects throughout Sindh and Balochistan. The power utility witnessed a year of decisive developments in 2024, with NEPRA approving the $2 billion Investment Plan in April, the Power Acquisition Plan (PAP) in May, and its generation tariff in October. These milestones are seen as critical to the company’s ongoing efforts to enhance its value chain, serve its expanding customer base, and diversify its portfolio. As the authority deliberates further on final decisions on distribution, transmission, and supply tariffs, as well as the resolution of write-off claims tied to its Multi-Year Tariff for the period 2017-2023, the 3.6 million customers see KE looking towards new horizons. During this crucial phase, regulatory decisions will play a pivotal role in sustaining the momentum of the power sector. KE’s ability to secure necessary approvals will be crucial in driving forward transformative energy projects and solidifying its position as a key driver of sustainable development within Pakistan’s power sector.