PACRA Maintains Entity Ratings of The Hub Power Company Limited

The rating reflects the holding company character of HUBCO with an exclusive focus on the different dimension of the energy sector. HUBCO itself is a 1,292MW RFO based power plant situated at Mouza Kund, Hub in Balochistan. With its investment in Narowal Energy Limited, Laraib Energy Limited, China Power Hub Generation Company, Thar Energy Limited and Thal Nova Power Thar Ltd, the Group has an established footprint in the power generation sector. Hub Power Services Limited is a wholly owned subsidiary of HUBCO that provides Operation and Maintenance (O&M) services to its existing power plants. In addition, the Company also holds 49% stake in China Power Hub Operating Company (Pvt) Limited, a joint venture with China Power International Maintenance Engineering Company Limited, to provide O&M to the Super Critical Coal Power Plant at Hub. The Company also holds a minority stake of 8% in Sindh Engro Coal Mining Company which has established a coal mining facility at Thar and is expanding the annual capacity. Prime international Oil and Gas Company (50% owned by Hub Power Holdings Ltd) has acquired all upstream operations and assets of ENI Pakistan under a J.V with ENI’s local employees. The company aims at expanding its operations in oil & gas exploration, water desalination and renewable energy through this strategic investment along with acquiring further stake of 9.5% in SECMC. Generation from Hub plant generation has declined over the reporting period with 9MFY24 Net Electrical Output recorded at 0 GWh (9MFY23: 205GWh) with a load factor of 0% while meeting its availability benchmark. The fall in generation represents lower demand from CPPA-G as a result of governments increasing preference for more cost-effective power generation options. During 9MFY24, the Company reported Net Revenue from Capacity invoices along with Late Payment Surcharge of PKR ~30,669mln. The Company’s profitability is supplemented from dividend from subsidiaries and income from management services provided to TEL and TNPTL accumulating to approx. PKR 9.5bln for the nine-month period ended on March 2024. Although HUBCO has a moderately leveraged structure to support its working capital requirements and investments in subsidiaries, but its strong cash flows and group’s financial strength are robust to provide any assistance to the Company.
The strong operating history along with the groups strength which is evident from the strategic investment portfolio contributes towards the assigned rating. Furthermore, the outstanding trade debts are guaranteed by the GoP providing further support. Moreover, the profitability of the Company is further supplemented by dividend income received from its subsidiaries

About the Entity
HUBCO, a listed company, was incorporated in 1991. Mega Conglomerate being the largest shareholder holds 19.48% of the total ownership. Other institutions include Fauji Foundation(8.5%), Allied bank (2.73%) and National Bank (2.22%). The remaining shareholding is held by various Financial Institutions, Insurance Companies, Joint Stock Companies, Modaraba/Mutual Fund & Leasing Companies and general public. Overall control of the company vests in a nine-member board of directors (BoD) including the CEO. The BoD comprises of 3 nominees from Mega Conglomerate, 1 nominee each of NIT, Fauji Foundation and Government of Balochistan along with 2 Independent directors. Mr. Kamran Kamal is the CEO of the company. He has been associated with the company for about seven years. He is accompanied by a team of qualified individuals.