PACRA Upgrades Entity Ratings of China Power Hub Generation Company (Private) Limited - AsiaNet-Pakistan

PACRA Upgrades Entity Ratings of China Power Hub Generation Company (Private) Limited

January 1, 2021 | | Share:

Lahore, January 01, 2021 (PPI-OT): China Power Hub Generation Company Private Limited (CPHGC) is a coal based 1320MW power plant (Complex), set up by State Power Investment Corporation (SPIC), one of the top Five State-owned Power Corporations in China along with Hub Power Company of Pakistan. The financial strength and experience in the energy chain of the sponsoring companies – CPIH and HUBCO reflects positively in the ratings.

Rating takes comfort from the company’s strategic importance to economy through its operations, the strong business profile and from the involvement of Pakistan and Chinese governments, as this project is a priority project under CPEC. Dedicated jetty at plant site and Coal Supply Agreement (CSA) with reputable international coal suppliers ensure the stable performance of the project. Initially the O and M contract was outsourced to the EPC contractor- China Energy Engineering Group for two years, which will be expired in August 21. Meanwhile the Company is in the process of finalization of long term O and M contractor.

Management has put forth the requisition for true up tariff to NEPRA, which would be concluded in due course. The company has successfully achieved all the performance benchmarks and provided 5,214GWh of electricity to the grid during 9MCY20. Profitability of the company is sanguine. DSRA is being funded through operating revenues. Till date the company has repaid two installments of its project related long term debt. However the leverage is yet sizeable and will gradually decline along with the life of the project.

Sustained good financial discipline and upholding strong operational performance in line with agreed performance levels, maintaining healthy debt service coverages remain important. Accumulation of circular debt may pose challenge to the cash flow management. However, the management supported by relevant business fundamentals remain committed to sustain timely debt repayments. External factors, if any, leading to weakening of financial profile may impact negatively.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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