SIALKOT, The Pakistan Credit Rating Agency (PACRA) has assigned a preliminary long-term rating of 'AA+' and a short-term rating of 'A1+' to The Hub Power Company Limited (HUBCO) for its proposed Pakistan Power Sector Term Finance Certificates (PPSTS) of PKR 6 billion. The ratings denote a stable outlook for the company, indicating a strong financial profile within the energy sector.
According to The Pakistan Credit Rating Agency Limited, the ratings reflect HUBCO's role as a holding company with interests spread across various dimensions of the energy sector. HUBCO operates a 1,292MW Residual Fuel Oil (RFO) based power plant located in Mouza Kund, Hub in Balochistan and holds significant investments in multiple energy companies, enhancing its power generation footprint. These investments include stakes in Narowal Energy Limited, Laraib Energy Limited, China Power Hub Generation Company, Thar Energy Limited, and Thal Nova Power Thar Ltd.
The company's subsidiary, Hub Power Services Limited, delivers Operation and Maintenance (O&M) services to its power plants, ensuring efficient and reliable plant operations. Furthermore, HUBCO maintains a 49% share in China Power Hub Operating Company (Pvt) Limited—a joint venture that provides O&M to the Super Critical Coal Power Plant at Hub, strengthening its presence in the energy maintenance sector.
HUBCO's strategic investments extend to the mining industry with an 8% stake in Sindh Engro Coal Mining Company, which is in the process of establishing a coal mining facility at Thar. Additionally, through its 50% ownership in Prime International Oil and Gas Company—a joint venture with the local employees of ENI—HUBCO has expanded into upstream oil and gas operations following the acquisition of ENI Pakistan's assets.
For the first quarter of FY24, HUBCO reported a topline of PKR 9,847 million, a significant decrease compared to the full-year figures of PKR 44,516 million reported in FY23. The plant did not generate electricity in 1QFY24, continuing the downtrend from FY23 when generation dropped to 205GWh due to the government's preference for electricity from lower-cost plants.
Despite not generating power in the recent quarter, HUBCO's financial health is bolstered by dividend income and management services fees from its subsidiaries. However, the agency noted that the resolution of outstanding receivables amounting to PKR 58,673 million due from the Central Power Purchasing Agency-Guarantee (CPPA-G) as of September 2023 remains a critical factor for the company's liquidity and financial stability.
HUBCO's sizeable borrowings reflect its aggressive approach towards leveraging growth opportunities and fulfilling working capital requirements while maintaining a stable financial performance in Pakistan's challenging energy sector.
The post Hub Power Company Receives AA+ Rating with Stable Outlook from PACRA appeared first on Pakistan Business News.