The Pakistan Credit Rating Agency (Pacra) has maintained long-term and short-term entity ratings of Pak-Arab Refinery Limited at 'AAA' (Triple A) and 'A1+' (A One Plus) respectively. The ratings denote the lowest expectations of credit risk emanating from an exceptionally strong capacity for timely payment of financial commitments.
The ratings reflect Parco's sovereign ownership structure - owned by the Government of Pakistan (60 percent) and Emirate of Abu Dhabi (30 percent) through Abu Dhabi Petroleum Investments LLC (ADPI) - and its strategic importance to the GoP for its socio-economic policies and its quest of reducing the import bill.
The company's low business risk emanates from its leading market position, strong demand of its products in the market, and diversified revenue stream. The ratings recognise the company's ability to manage its financial profile, which has lately been stretched by higher short-term borrowings, though it is supplemented by strong cash flows and GoP's frequent intervention to mop up circular debt - prevalent in the country's energy chain.
An amicable resolution of the circular debt issue, the management's ability to maintain a strong financial profile and a favourable regulatory regime, especially deemed duty on HSD remain critical for the ratings. The ratings could be negatively impacted by excessive leveraging and/or extended curtailment of Parco's operations below break-even point.-PR
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