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LAHORE, The Pakistan Credit Rating Agency Limited (PACRA) has assigned a preliminary rating to The Hub Power Company Limited (HUBCO) for its upcoming privately placed short-term sukuk issuance. This rating reflects HUBCO’s established presence in the power generation sector and its diverse investment portfolio in various energy projects.
According to Pakistan Credit Rating Agency Limited, HUBCO, a 1,292MW RFO based power plant located in Mouza Kund, Hub, Balochistan, is a significant player in Pakistan’s energy sector. With investments in entities like Narowal Energy Limited, Laraib Energy Limited, China Power Hub Generation Company, Thar Energy Limited, and Thal Nova Power Thar Ltd, HUBCO has a robust footprint in power generation. Hub Power Services Limited, a wholly-owned subsidiary, provides Operation and Maintenance (O&M) services to HUBCO’s power plants. The company also holds a 49% stake in China Power Hub Operating Company (Pvt) Limited, a joint venture providing O&M services to the Super Critical Coal Power Plant at Hub.
HUBCO also has an 8% stake in Sindh Engro Coal Mining Company, which is establishing a coal mining facility at Thar. Another significant venture is Prime International Oil and Gas Company, which acquired all upstream operations and assets of ENI Pakistan in a joint venture. For the first quarter of FY24, HUBCO reported a topline of PKR 9,847 million (FY23: PKR 44,516 million). However, there was no generation from the plant in 1QFY24, and generation declined significantly in FY23 due to the government’s priority for electricity from lower-cost plants. The company’s profitability is further bolstered by dividends and income from management services from its subsidiaries.
HUBCO’s financial position includes substantial borrowings to support its working capital needs and growth opportunities. The settlement of outstanding receivables from CPPA-G, amounting to PKR 58,673 million as of September 2023, remains a key concern for the company.
HUBCO, a listed company, was incorporated in 1991 with major shareholders including Mega Conglomerate, Fauji Foundation, Allied Bank, and National Bank. The nine-member Board of Directors, including the CEO, oversees the company’s operations. Mr. Kamran Kamal, with around seven years of association with the company, leads as CEO alongside a team of qualified professionals.
The instrument in question is an unsecured, privately placed short-term sukuk of PKR 6 billion, set to be issued in November 2023 to finance the company’s working capital requirements. The sukuk, with a six-month tenor, carries a profit rate of 6M KIBOR + 0.25%, with interest and principal to be paid in a bullet payment at maturity.
Source: The Pakistan Credit Rating Agency Limited
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