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Fitch grants ‘AA+(lka)-Outlook Stable rating to Lakdhanavi Limited’


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  • Lakdhanavi is an established brand for power plant construction in South Asia

Lakdhanavi Ltd, Sri Lanka’s premier power company received a significant public accolade when the international ratings agency Fitch granted National Long-Term Rating of ‘AA+(lka)-Outlook Stable rating to Lakdhanavi last week. The rating is one notch below the prime rating of AAA (lka), a statement from the company said.   

In assigning this rating Fitch cited the leading market position of Lakdhanavi’s parent, LTL Holdings (Pvt) Ltd (LTLH) in Sri Lanka’s power sector.  
 The Rating agency also said that it expects the group to maintain an adequate financial profile. Sri Lanka’s national power utility, CEB holds 63% ownership in LTL. It also noted LTL Group’s reasonable insulation from its loss-making parent CEB due to the presence of minority shareholders, LTLH’s independent management team, separate financing arrangements and LTLH’s record of no cash leakages other than modest dividends.   
Lakdhanavi is an established brand for power plant construction in South Asia. It has built power plants in Maldives, Bangladesh and in Nepal. Lakdhanavi has three subsidiaries in Bangladesh, one in Singapore and a Branch in Nepal.   
Its other strong point is the very long-term Operation and Maintenance Contracts with large thermal power plants. It currently has 3 such contracts in Bangladesh and one in Sri Lanka.   
Fitch further stated that LTL Group’s diversification to Bangladeshi operations and other businesses have mitigated the risks from exposure to CEB. Lakdhanavi has 218MW generation capacity operating in Bangladesh. They are backed by 15-year Power Purchase Agreements (PPA) with state owned Bangladesh Power Development Board. The cash flow in these are largely guaranteed through capacity-based tariff payments and cost pass-through mechanisms, supporting stable cash flow. The company’s third power plant in Bangladesh, Feni Lanka, commenced operations in late 2019.  According to the management, LTL Group has had minimal impact from Covid with none of its power plant related operations, in Sri Lanka, Nepal and Bangladesh even facing a single day of shutting down. Power Plants are operated 24 hours by teams which are quarantined on a rolling basis.   The Sri Lankan government has awarded Lakdhanavi with a new 300MW Diesel/LNG power plant in Kerawalapitiya, Sri Lanka is on a “Build Operate Own Transfer” basis following a tender procedure. The company is yet to receive the formal approval from the regulator and to sign the PPA.  

 

  • LTL Group has had minimal impact from Covid with none of its power plant  related operations, in Sri Lanka, Nepal and Bangladesh even facing a  single day of shutting down



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