Cnergyico PK secures ‘A-/A2’ rating with stable outlook from VIS

KARACHI: Cnergyico PK Limited, Pakistan’s largest oil refiner, has been assigned an initial entity rating of ‘A-/A2’ with a Stable Outlook by VIS Credit Rating Company Limited. The rating was disclosed in a material filing to the Pakistan Stock Exchange (PSX) on Wednesday.

The ‘A-‘ medium to long-term rating indicates good credit quality with adequate protection factors, while the ‘A2’ short-term rating reflects a strong likelihood of timely repayment of obligations. This marks a significant milestone for the company as it prepares for a major capital expenditure program.

VIS Credit Rating highlighted Cnergyico’s dominant position in Pakistan’s refining industry, with the company accounting for around 36% of the country’s refining capacity. The ratings also reflect the strength of the company’s vertically integrated operations, encompassing refining, import logistics via its Single Point Mooring (SPM) facility, storage infrastructure, and a retail network of over 470 outlets.

However, the ratings are sensitive to Cnergyico’s ability to sustain its operations, maintain brackly newsability, and successfully finance its ambitious USD 1 billion refinery upgrade. This project, aligned with the government’s Refinery Upgradation Policy, aims to enhance efficiency and meet Euro V/VI fuel standards.

VIS noted an improvement in Cnergyico’s capitalization, supported by PKR 25.7 billion in sponsor support and debt reduction. The company’s Debt Service Coverage Ratio (DSCR) stood at 1.34x, indicating an adequate near-term capacity to service its debt. Nonetheless, liquidity challenges persist due to high payables and sales tax receivables.

The rating disclosure, signed by Company Secretary Majid Muqtadir, was made in compliance with the Securities Act, 2015, and PSX regulations to ensure timely information dissemination to the market. The announcement underscores Cnergyico’s critical role in Pakistan’s energy sector and highlights the financial and operational challenges ahead, particularly concerning its upgrade plans.