China Power Hub Generation Company (Pvt.) Limited (CPHGC) operates a 1,320 MW imported coal-based power plant at Hub, Baluchistan, developed under the CPEC energy program. Incorporated in 2015, the plant achieved COD in August 2019 and remains one of Pakistan’s largest private power projects.

The Company operates under a NEPRA-approved cost-plus tariff featuring quarterly indexation for exchange rate movements, US CPI, N-CPI Local, SOFR-based interest adjustments, and coal price changes. Both fixed and variable cost components are passed through, allowing margin preservation against inflation, currency volatility, and fuel market shifts. Revenue recognition continues as per notified indexations, while tariff adjustments under Clause 12.10 remain under appellate review without affecting current entitlement.

Under the tariff framework, CPHGC earns a regulated return on equity denominated in USD. Despite lower system dispatch in recent years, the availability-based PPA ensures stable capacity revenue. Return on equity remained strong at ~25.8% in FY25, reflecting the inherent resilience of the project structure.

CPHGC is a joint venture between China Power International Holding Limited (52.5%) and Hub Power Holding Limited (47.5%). The ownership structure remained unchanged, with both sponsors demonstrating long-term strategic commitment, operational oversight, and financial capability. Their global and domestic energy-sector experience enhances the Company’s governance and execution capacity.

Ownership remains stable with full sponsor commitment. The strategic nature of the project under CPEC further strengthens long-term security through governmental attention and bilateral engagement. Both sponsors continue to actively participate in governance and operational oversight, ensuring stability at both ownership and board levels.

The sponsor group demonstrates extensive sector knowledge across thermal, renewable, and integrated energy systems. Their involvement spans project development, financing, technical execution, and long-term operations across multiple jurisdictions. This experience materially reduces operational and execution risks for CPHGC and enables proactive management of both regulatory and operational challenges.

As of CY25, State Power Investment Corporation (SPIC) the ultimate parent of CPIL remains one of the world’s largest power conglomerates, with registered capital of RMB 45 billion and a global asset base exceeding USD 250 billion, based on publicly available disclosures.
Hub Power Holdings Limited (HUBCO) continues to represent a strong domestic sponsor, supported by its listed status, established capital market access, and diversified investments across power generation and energy-related businesses. HUBCO’s equity investments in subsidiaries and associates provide balance-sheet support and reinforce refinancing flexibility at the project level.
Collectively, sponsor strength underpins the Company’s long-term financial resilience, particularly in periods of sector stress.

The Board of Directors comprises seven members, out of which four represent China Power International (Pakistan) Investment Limited and three represent Hub Power Holdings Limited. The Board functions through clearly defined governance protocols and committee structures covering audit, risk management, and strategic oversight.

The Board comprises representatives from CPIPI and HPHL with expertise across power engineering, finance, and public policy. The Chairman, Mr. Zhao Yonggang, has a background in thermal energy and power engineering, while directors such as Mr. Zhang Xi and Mr. Shi Zhen Xing bring experience in accounting, financial management, and project development. Representation from HPHL, including Mr. Kamran Kamal, strengthens financial oversight and governance, ensuring balanced technical and managerial supervision.

The Board met regularly during CY24 and CY25 to review strategy, compliance, operational performance, and capital structure. Attendance during the period remained satisfactory, and no evidence of governance weakness or strategic misalignment was observed.

A.F. Ferguson & Co. continues as statutory auditor. The financial statements for FY25 were issued with an unqualified opinion, suggesting fair representation of financial position and performance. Accounting practices remain consistent with international standards.

CPHGC operates under a clearly defined organizational structure with well-established reporting lines. Departmental heads report directly to the CEO, who in turn reports to the Board, ensuring accountability and effective governance oversight. During CY25, the Company transitioned operations and maintenance (O&M) to an in-house model following the termination of the outsourced O&M arrangement in February 2025, strengthening operational control and internal capability.

The management team continues to be led by Mr. Shi Zhen Xing (CEO), supported by a seasoned leadership group with extensive experience across engineering, finance, legal, and project development functions. Key roles, including finance, engineering, legal, and project development, remain staffed by long-tenured professionals, providing continuity and institutional knowledge. No material senior management changes were observed during CY25.

Management effectiveness is reflected in stable plant operations, continued achievement of availability benchmarks, and orderly execution of strategic decisions, including the shift to self-managed O&M. The combination of experienced leadership, internalized technical capabilities, and structured decision-making processes supports operational reliability and responsiveness under evolving sector conditions.

The Company maintains an adequate management information system (MIS) to monitor operations and financial performance. An in-house internal audit function remains in place, supporting risk identification, compliance monitoring, and internal control effectiveness. The transition to in-house O&M further enhances visibility and control over operational risks.

CPHGC has executed a long-term Power Purchase Agreement with CPPA-G for a period of 30 years commenced in August 2019. The agreement entitles the Company to capacity-based revenue subject to availability performance.

During the review period, the Company transitioned from outsourced O&M to a self-managed model effective February 1, 2025, following termination of the agreements with CPHO and CPIME. All operational staff were transferred to the Company’s payroll, strengthening internal capability, oversight, and cost visibility. The shift reduces related-party dependence and allows tighter control over maintenance planning, performance standards, and operational discipline. The transition has been implemented smoothly without reported disruption.

CPHGC has a dedicated jetty at the plant site, ensuring efficient coal handling and delivery operations. Following the expiry of the CSA, the Company now produces coal on a spot basis as per operational requirements. The plant’s annual coal requirement remains approximately 3.8mln tons, equivalent to an average of three vessels per month, each with a capacity of 160,000 tons, delivered to the jetty. However, actual coal procurement depends on the demand from the power purchaser.

The Company maintains comprehensive insurance coverage for property damage, business interruption, and liabilities.

Pakistan’s installed power generation capacity reached ~46,605 MW in 9MFY25, up ~11% from ~42,131 MW in the same period last year, primarily driven by ~2,813 MW added through net metering in renewable energy. Despite the growth in capacity, actual power generation declined by ~2% to ~10,291 MW, resulting in a lower average capacity factor of ~22.1% (SPLY: 25.0%), highlighting underutilization within the system. Thermal generation remains the largest contributor (~41,734 GWh), followed by hydel (~27,413 GWh), nuclear (~17,175 GWh), and renewables (~3,823 GWh). While renewable capacity additions have partially offset the impact of the government’s termination of certain PPAs with Independent Power Producers (IPPs), thermal and coal-based plants continue to dominate both installed capacity and generation. The sector continues to face significant circular debt, currently estimated at ~PKR 2.4 trillion. To address this, the government plans to finance PKR ~1.25 trillion through commercial bank loans over six years, with an additional PKR ~250 billion already allocated in the federal budget. The new debt will be recorded in the books of the Central Power Purchasing Agency (CPPA-G).

Total sector borrowings stood at ~PKR 471.8 billion as of end-June 2025, down ~7% from ~PKR 505.3 billion in the previous year. Long-term loans (~PKR 272.1 billion) form the majority, while short-term borrowings (~PKR 190 billion) remain moderate. Coal- and thermal-based power plants account for nearly half of total borrowings, with hydel, wind, and solar plants making up the remainder.

Going Forward, the government is actively working to introduce competitive electricity markets and implement broader power sector reforms. These initiatives are still at early stages, and the full impact on sector dynamics is yet to be disclosed.

Generation during 9MCY25 was reported at 698.94 GWh, compared to 220.04 GWh in SPLY. Against the available capacity of 7,549.42 GWh, the increase from the previous period reflects improved offtake from the power purchaser. However, overall plant utilization remained low, with a load factor of approximately 9.3% during 9MCY25 relative to installed capacity.

A default occurred during the startup transfer on June 19, 2025, resulting in forced outages. The Company successfully restored operations by July 12, 2025. The PPA availability benchmark is 85%, equivalent to 8,184 GWh; however, during 9MCY25, actual availability was 7,549.42 GWh, representing a shortfall of approximately 7.8%. Efficiency remained strong despite the temporary disruption.

Debt financing constitutes 75% of the allowed project cost i.e. USD 1,995mln. Hence, allowed project debt and equity stood at USD 1,496.25mln (75%) and USD 498.75mln (25%). Total project debt was funded by Chinese lenders with the consortium led by CDB including EXIM Bank, BOC, CCB and ICBC. Project debt has the pricing of Daily Simple SOFR + Credit Adjustment Spread (CAS at 0.26161%) + 3.8% Spread previously it was 3-month LIBOR, payable quarterly. The principal repayment shall be made in 20 semi-annual installments.

As of 9MCY25, CPHGC held liquid investments of PKR 55,942mln, along with cash and bank balances of PKR 69,436mln. Supported by this liquidity, the Company declared an interim dividend of PKR 19,929mln as of September 2025. The position reflects prudent cash flow management and provides the Company with the capacity to meet both operational and financial commitments.

CPHGC finances its operations through a combination of internal cash generation and approved working capital lines of PKR 69bln, including PKR 52.4bln of funded facility. As of 9MCY25, short-term borrowings of PKR 30.6bln were utilized against the available line, leaving a sufficient cushion to meet operational requirements. Trade receivables remain high due to persistent settlement delays in the power sector. As of September 2025, receivable days ranged between 230–246, consistent with historical levels of 212–260 days. Although the receivables pertain to energy supply, are secured under the sovereign guarantee stipulated in the Implementation Agreement. Internal cash generation, together with sizeable liquidity buffers, enables the Company to manage working capital requirements comfortably while maintaining uninterrupted operations.

During 9MCY25, free cash flows from operations (FCFO) amounted to PKR 85,165mln, compared to PKR 120,332mln in CY24. The interest coverage and debt service coverage ratios stood at 4.6x and 1.6x, respectively, underscoring the Company’s capacity to meet its financial obligations.

As of September 2025, equity stood at PKR 283,540mln. The debt-to-capital ratio was approximately 50.1%, reflecting moderate leverage. The debt is primarily composed of project-related borrowings, with short-term borrowings remaining low relative to total debt. Due to timely and periodic repayments, the gearing ratio is expected to decrease further.