The Pakistan Credit Rating Agency Limited
Press Release


Anam Waqas Ghayour

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA maintains Entity Ratings of China Power Hub Generation Company (Pvt.) Limited.

Rating Type Entity
(30-Dec-22 )
(31-Dec-21 )
Action Maintain Maintain
Long Term AA+ AA+
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The Ratings take comfort from the fact that this project is a priority project under CPEC and has significant economic and strategic importance. Presence of dedicated jetty at plant site and Coal Supply Agreement (CSA) with reputable international coal suppliers which ensure stable performance of the project provides more cushion to the Ratings. Going forward, due to increase in the international prices of coal the Company is currently in discussion with the GoP for alternate solutions. O&M agreement is with Hub Power Services Ltd. (HPSL) - a joint venture between Hub Power Holdings Limited and China Power International Maintenance Engineering Company Limited. The Company is in process of announcing Project Completion Date (PCD) as all the covenants have been fulfilled except that of revolving fund. Management has requested a true-up tariff from NEPRA, and NEPRA has already securitized the request. Accordingly, the company anticipates that the tariff will be finalized in the first quarter of 2023. The company has met all of the performance goals with success and supplied 5,305 GWh of electricity to the grid in 9MCY22 as opposed to 5,507 GWh in 9MCY21. The Company reported a turnover of PKR 153bln during the 9MCY22 (9MCY21: 80bln) and has attained a bottom line of PKR 24bln in 9MCY22 as opposed to PKR 22blnin 9MCY21.
DSRA is maintained by the company and is funded by internal cash generation. The company has paid-off six instalments of the long-term project-related debt. In reference to short-term borrowings, CPHGC has procured working capital lines of PKR 66.7bln out of which short-term borrowing utilization stood at PKR 43.7bln during 9MCY22. Nevertheless, the leverage is still significant and will progressively decrease over the course of the project.
Circular debt buildup could make managing cash flow difficult. The management, however, is steadfast in its commitment to maintain on-time debt repayments and is supported by pertinent business fundamentals. Going forward, upholding to operational benchmark and adherence to financial parameters along with timely repayment of project debt remains crucial to sustain the assigned ratings.

About the Entity
State Power Investment Company (52.5%) in collaboration with the Hub Power Company (47.5%) has setup a 1320MW coal-fired power plant in 2015 at Hub, Baluchistan. It's construction was completed in 2018 and the plant commenced its operations in 2019. Power Purchase Agreement (PPA) is signed for thirty years. Established and registered in Hong Kong in 1994, State Power International Holding Ltd. (known as China Power International Holding Ltd. till 2002) is primarily focused on the development, construction, operation, overseas investment, and financing of power supply programmes. Whereas, HUBCO is one of the first and largest Independent Power Producers (IPP) in Pakistan to be financed by the private sector in Southern Asia. The BoD comprises of seven members, four members represent China Power International (Pakistan) Investment Limited, while three represents Hub Power Holdings Limited. The management team is led by Mr. Ren Lihui, appointed as CEO. He is accompanied by a team of qualified and experienced Chinese and Pakistani individuals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.