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

China Power Hub Generation Company (Pvt.) Limited (“CPHGC” or “the Company”) is a private limited company and operates a coal fired power plant. The ratings benefit from the Company’s inclusion in the China-Pakistan Economic Corridor (CPEC), reflecting its strategic significance. The financial strength and extensive experience of the sponsoring groups in the energy sector are positive contributors to the ratings. The Implementation Agreement provides a sovereign guarantee, given adherence to agreed performance benchmarks (85% availability and 39.2% efficiency). The O&M agreement is managed by a consortium comprising China Power Hub Operating Company (Pvt.) Limited and China Power International Maintenance Engineering Company Limited. Additionally, the presence of a dedicated jetty at the plant site and a Coal Supply Agreement (CSA) with reputable international suppliers, along with CPHGC’s purchase of coal from Awan Trading at spot rates in PKR to avoid delays caused by foreign exchange issues, ensure stable project performance. CPHGC applied for a one-time tariff adjustment under Clause 12.10, Schedule 1 of the Power Purchase Agreement (PPA), which was determined by NEPRA in June 2022. The Company later filed an appeal with the Appellate Tribunal and secured a stay order. The case is currently pending a final decision. Under the PPA, CPHGC is guaranteed a 50% offtake. During 9MCY24, the plant generated a net electrical output of 220 GWh (CY23: 735.45 GWh), while adhering to its agreed benchmarks. However, to maintain an efficient energy mix and reduce economic costs, the power purchaser sourced electricity from cheaper alternatives, resulting in lower generation compared to the previous period, with the 50% offtake not being fully utilized. The Debt Service Reserve Account (DSRA) is fully maintained and funded through internal cash flows. Regarding short-term borrowings, the Company secured amicable working capital facilities with a sufficient cushion available as of end September 2024. Nevertheless, the leverage is still significant and will progressively decrease over time with ongoing project debt repayments.
The accumulation of circular debt could pose challenges in managing cash flows. However, the management remains firmly committed to ensuring timely debt repayments, backed by strong underlying 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. Ratings remains sensitive to any changes in the regulatory environment.

About the Entity
State Power Investment Company (52.5%) partnered with the Hub Power Company (47.5%) to establish a 1,320 MW coal-fired power plant in 2015 at Hub, Baluchistan. Construction was completed in 2018, and the plant began operations in 2019. A Power Purchase Agreement (PPA) has been secured for a duration of 30 years from the date of COD. The Company officially declared the Project Completion Date (PCD) as February 23, 2023, after meeting all required covenants. State Power International Holding Ltd. established in Hong Kong, specializes in the development, construction, operation, and financing of power supply programs globally. HUBCO, one of Pakistan’s pioneering and largest private-sector Independent Power Producers (IPPs). The Board of Directors of CPHGC consists of seven members: four representing China Power International (Pakistan) Investment Limited and three from Hub Power Holdings Limited. The management team, led by CEO Mr. Shi Zhenxing, includes experienced professionals from both China and Pakistan.