Halmore Power Generation Company Limited

CREDIT RATING REPORT | Mar-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
21-Mar-25 AA- A1 Stable Maintain -
22-Mar-24 AA- A1 Stable Maintain -
22-Mar-23 AA- A1 Stable Maintain -
22-Mar-22 AA- A1 Stable Upgrade -
24-Mar-21 A+ A1 Stable Maintain -
About the Entity

Halmore Power Generation Company Limited (“HPGCL” or “the Company”), an Independent Power Producer (IPP) with a gross capacity of 225 MW, operating under the 2002 power policy, is a combined gas cycle turbine plant with gas as primary and HSD as secondary fuel. Mian Karim ud Din owns 99.99% of the shares of the company. The four-member Board of Directors (BoD), including one executive director, is representative of the sponsoring family. The Chief Executive Officer (CEO), Mr. Mahmood Akhbar, brings over fifteen years of experience in the construction, operation, and maintenance of power generation and transmission systems.

Rating Rationale

Halmore Power Generation Company Limited ((“HPGCL” or “the Company”) is an independent power producer (IPP), operating a Combined Cycle gas turbine plant on a build-own operate (BOO), having gross capacity of 225MW located at Bhikki Sheikhupura. The plant achieved its commercial operations in June 2011 with its PPA valid till Feb 2042. Mr. Karim Ud Din is the major sponsor of the company. The Company has an O&M with General Electric and fuel supply agreements with SNGPL and PSO. The ratings of Halmore take comfort from the Power Purchase Agreement signed between the Power Purchaser and HPGCL, which ensures capacity payments as well as guaranteed electricity offtake—given adherence to agreed parameters. Further, a cushion is drawn from low operational risk, a result of the established performance credentials of GE the O&M operator. The required availability for Halmore Power under the PPA is 88%. During the period, average plant availability remained in accordance with the agreed parameter. The plant generated 207 GWh of net electrical output for the year ended June 2024. The fall in generation represents lower demand from NTDC as a result of the government's increasing preference for more cost-effective power generation options. Net income recorded during FY24 was PKR 3,139mln (FY23: PKR 3,277mln, FY22: PKR 1,060mln, FY21: PKR 4,215mln). The company successfully paid off its long-term project-related debt in June 2021, resulting in a favorable impact on its financial risk profile. At the end of June 2024, the debt profile comprises short-term borrowings only, which have been availed to meet working capital requirements, mainly due to delayed payments from the off-taker. The company has an equity base of PKR 24,042 million, whereas leveraging stands at 28.1% at the end of FY24. Negotiations are currently underway between the government and Independent Power Producers (IPPs) regarding the implementation of a Hybrid Take-and-Pay model.

Key Rating Drivers

Upholding operational performance in line with agreed performance levels would remain a key rating driver. If there are any development regarding negotiation with task force ,that may impact the company rating, as the outcome of the negotiations may influence its financial performance.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Halmore Power Generation Company Limited

rating analysis

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Profile
Plant

Halmore Power Generation Company Limited (Halmore Power), a private limited company, is operating a Combined Cycle gas turbine plant on a build-own-operate (BOO) basis, with a gross capacity of 225 MW located at Bhikhi district, Sheikhupura, Punjab. The plant has been into its commercial operations since June 2011.


Tariff

Halmore Power's key source of earnings is the generation tariff from the power purchaser, NTDC. The reference generation tariff comprises a capacity charge component and an energy charge component. The levelized tariff on gas as per NEPRA determination is 4.0203 cents/kWh and on HSD fuel 9.1421 cents/kWh.


Return on Project

The dollar IRR of Halmore Power, as agreed with NEPRA, is 12%.


Ownership
Ownership Structure

Halmore Power is majorly owned by Mian Karim Ud Din with 99.99% shareholding. The company was established and owned by Mian Muhammad Sharif; however, after his demise in September 2017, all of his shareholding as part of his inheritance was transferred to Mian Karim Ud Din.


Stability

Halmore Group is a conglomerate of businesses and ventures backed by a group of UK-based investors primarily involved in the UK's real estate sector with prime projects in Central London.


Business Acumen

The sponsors have more than a decade of experience in the power sector. Furthermore, they are actively involved in the UK's real estate sector and are currently exploring investment opportunities in various local sectors such as LNG, oil & gas, hotels, and infrastructure projects. The Halmore Group also includes other companies, such as Oilco Petroleum (Pvt) Ltd, Energas Terminal (Pvt) Ltd, and Halmore Properties (Pvt) Ltd.


Financial Strength

The financial strength of the sponsors is considered strong as the sponsors have well-diversified, profitable businesses. Sponsors being a UK-based businessman with a claimed net worth of over US$600 million.


Governance
Board Structure

The board of directors (BoD) comprises four directors, including the Chief Executive Officer (CEO). All the members except the CEO are representatives from the sponsoring family. Mian Karim ud din is the chairman of the board. He is a Chartered Accountant with over three decades of experience


Members’ Profile

Each board member is professionally qualified and brings diverse experience with them. Members from the sponsoring family have vast experience in construction and hoteling. Alternatively, the CEO is a mechanical engineer and brings diverse experience in project development, construction management, and operations and maintenance relevant to the power sector. The CEO has more than 15 years of working experience at Halmore Power Generation Company Limited.


Board Effectiveness

The experiences of the board will help guide the management in developing effective operational and financial policies. Currently there are no board committees. The board conducts meetings on a quarterly basis to discuss the relevant operations and financial aspects of the plant.


Financial Transparency

KPMG chartered accountants is the auditor of the company, and it has expressed an unqualified opinion on FY24 financial statements while highlighting the company’s pending litigation with the power purchaser.


Management
Organizational Structure

Halmore Power has a lean management structure with a small and efficient management team. The CEO is supported by a team of qualified and experienced professionals.


Management Team

Mr. Mahmood Akhbar has been the Chief Executive Officer since March 2024.He is supported by a team of highly skilled professionals, responsible for overseeing the firm's financial management and operational efficiency.


Effectiveness

The management of Halmore Power is mostly engaged in the finance-related activities. The operations and maintenance of the plant have been outsourced to GE by way of the O&M contract. The company’s management team is conducting regular meetings with GE personnel to further enhance and fortify their knowledge of operating the power plant.


Control Environment

The company maintains an adequate MIS, which helps management to keep track of all operations and liaise with the O&M operator.


Operational Risk
Power Purchase Agreement

Halmore Power's key source of earnings is the revenue generated through the sale of electricity to the power purchaser, NTDC. The company will receive the capacity payments if it is at the benchmark availability and is ready to provide electricity, even if no purchase order is placed by the power purchaser.


Operation and Maintenance

The company has entered into an operation and maintenance agreement with the consortium of General Electric International, Inc. and General Electric Energy Parts, Inc. on 27 April 2008. The term of the O&M agreement is extended till June 2041.


Resource Risk

Halmore Power has signed a Gas Supply Agreement and Fuel Supply Agreement with SNGPL and PSO for gas and HSD, respectively, for 30 years. The company procures HSD from other oil marketing companies as well. With the inclusion of RLNG into the system, gas availability to the company has improved. However, in FY23 and FY24, the plant has been mainly operated on gas/RLNG (99%), and remaining operations are conducted on HSD (1%).


Insurance Cover

Halmore Power has adequate insurance coverage for property damage (PKR 40.2 bln) and business interruption (PKR 5.2 bln).


Performance Risk
Industry Dynamics

Pakistan's power generation in FY-2024 dropped by 1.9% to 127,160 GWh, marking the second consecutive annual decline, driven by higher electricity costs, rising inflation, and reduced economic activity. Hydropower remained the largest contributor, making up 31% of total generation, followed by RLNG and nuclear power, each accounting for 19%. Local coal-based power plants contributed 12%, with the rest supplied by other thermal sources, including imported coal. A small portion comes from renewable resources like wind and solar.


Generation

Electricity generation during 1HFY25 is 190 GWH (FY24: 207 GWH, FY23: 287 GWH, FY22: 676 GWH). The decline in generation was primarily driven by low demand from the power purchaser, NTDC. This reduction in demand is attributed to the improving energy mix in the country, with an increased share of RLNG and coal-based power projects contributing to the lower reliance on gas-powered plants like Halmore Power. Despite the decrease in generation, the plant's strong operational performance and adherence to efficiency benchmarks have allowed it to remain competitive in the market.


Performance Benchmark

The plant's availability during FY24 was 95% (FY23: 95%, FY22: 94%, FY21: 88.04%), which remains well above the required level of 88% as per the Power Purchase Agreement (PPA). This high level of availability provides comfort regarding the plant's reliability and operational stability, contributing to strong financial performance. As a result, the company’s profits were decent, with a reported gross profit of PKR 1,427mln for the first half of FY25, PKR 4,245mln for FY24, and PKR 3,277mln for FY23.


Financial Risk
Financing Structure Analysis

Halmore Power project capital structure comprises 25% equity (PKR 4,894mln) and 75% debt (PKR 14,683mln). Project cost after project overruns was PKR 22,750mln. Halmore Power has completely paid off its project-related debt in FY21.


Liquidity Profile

As end of Dec 2024, total receivables of the company stood at PKR 10,924mln (end of Dec 2023: 7,447mln , end of June 2024: 8,644mln, end of June 23: PKR 9,643mln). As circular debt continues to be an issue for companies operating in the power sector. Consequently, IPPs have to manage their liquidity requirements from short-term borrowings.


Working Capital Financing

Halmore's working capital requirements are heavily reliant on payments from the power purchaser. With an increase in receivables, HPGCL's net cash cycle has risen to (FY24: 227 days; FY23: 208 days; FY22: 172 days). The increase is primarily due to delays in the receipt of trade receivables. To manage its working capital, the company has procured working capital lines and utilized PKR 7.18bln in short-term borrowings (STBs) as of December 2024. The company managed its working capital needs through internal resources, along with the use of working finance facilities.


Cash Flow Analysis

During 1HFY25, Halmore’s FCFO decreased to PKR 915mln (1HFY24: PKR 954mln) due to a reduction in electricity generation caused by lower demand from the power purchaser NTDC. FCFO for FY24 also saw a slight decline compared to 1HFY25 (1HFY25: PKR 915mln; 1HFY24: PKR 954mln) due to higher finance costs. Interest coverage (FCFO/Finance Cost + CMLTB + Excess Borrowings) declined to 1.6x in 1HFY25, compared to 1.8x in 1HFY24, as a result of higher policy rates and outstanding borrowings.


Capitalization

The company’s leverage has improved and remained stable, with a moderate leverage ratio of 25.1% as of December 2024, reflecting a decrease in short-term borrowings compared to 1HFY23. In contrast, the company’s leverage ratio stood at 31.7% in December 2023. . Apart from equity, the sponsor has given a loan of PKR 3,184mln as cost overruns over and above PKR 19,500mln were to be borne by the sponsor. As per the agreement, the sponsor loan was payable from 31st December 2017; however, during FY17, the terms of the loan have changed, and now it has been treated as part of equity. The loan is payable at the discretion of the company.
 
 

Mar-25

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Halmore Power Generation Company Limited

financial summary

(PKR mln)

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Dec-24
6M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 16,296 16,716 16,137 16,189
2. Investments 0 2,901 3,520 5,828
3. Related Party Exposure 0 0 0 0
4. Current Assets 14,213 15,937 16,412 12,896
a. Inventories 494 494 494 494
b. Trade Receivables 10,924 8,405 9,643 8,756
5. Total Assets 30,509 35,554 36,069 34,913
6. Current Liabilities 1,925 2,331 3,445 2,983
a. Trade Payables 335 848 1,892 1,649
7. Borrowings 7,185 9,419 9,566 13,480
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 0 42 14 17
10. Net Assets 21,399 23,762 23,045 18,432
11. Shareholders' Equity 21,399 23,763 23,045 18,432
B. INCOME STATEMENT
1. Sales 8,585 13,255 13,925 25,598
a. Cost of Good Sold (7,157) (9,010) (10,836) (18,146)
2. Gross Profit 1,428 4,245 3,089 7,451
a. Operating Expenses (151) (310) (293) (293)
3. Operating Profit 1,277 3,935 2,796 7,158
a. Non Operating Income or (Expense) 205 (122) 1,264 (14)
4. Profit or (Loss) before Interest and Tax 1,482 3,813 4,060 7,144
a. Total Finance Cost (566) (938) (761) (960)
b. Taxation 0 (15) (22) 0
6. Net Income Or (Loss) 915 2,860 3,277 6,184
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 1,329 4,671 5,131 7,850
b. Net Cash from Operating Activities before Working Capital Changes 1,329 3,666 4,323 7,002
c. Changes in Working Capital (5,343) (168) (283) 2,023
1. Net Cash provided by Operating Activities (4,014) 3,498 4,039 9,025
2. Net Cash (Used in) or Available From Investing Activities (1) (729) (703) (40)
3. Net Cash (Used in) or Available From Financing Activities (3,279) (2,118) (1,575) (82)
4. Net Cash generated or (Used) during the period (7,294) 651 1,762 8,903
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) 29.5% -4.8% -45.6% 101.8%
b. Gross Profit Margin 16.6% 32.0% 22.2% 29.1%
c. Net Profit Margin 10.7% 21.6% 23.5% 24.2%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) -46.8% 34.0% 34.8% 38.6%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 7.9% 11.9% 14.5% 34.3%
2. Working Capital Management
a. Gross Working Capital (Average Days) 216 262 254 169
b. Net Working Capital (Average Days) 203 224 208 155
c. Current Ratio (Current Assets / Current Liabilities) 7.4 6.8 4.8 4.3
3. Coverages
a. EBITDA / Finance Cost 2.4 5.0 6.8 8.2
b. FCFO / Finance Cost+CMLTB+Excess STB 2.3 5.0 6.7 8.2
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 0.0 0.0 0.0 0.4
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 25.1% 28.4% 29.3% 42.2%
b. Interest or Markup Payable (Days) 356.8 389.2 511.8 412.5
c. Entity Average Borrowing Rate 12.7% 9.7% 7.2% 7.9%

Mar-25

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Halmore Power Generation Company Limited

rating scale

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Mar-25

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Halmore Power Generation Company Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
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      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
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Mar-25

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