June 28, 2019 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained the entity ratings of Hub Power Company Limited (Hubco) at ‘AA+’ for long-term and ‘A1+’ for short-term. The outlook on the assigned ratings is stable.
The rating reflects the holding company character of Hubco with an exclusive focus on the different dimension of the energy sector. In addition to the investment book, Hubco itself is a large RFO based power plant.
Hubco aims to expand generation capacity to boost the country's power generation by utilizing Pakistan's indigenous natural resources. It is setting up new coal power plants (i) China Power Hub Generation Company (CPHGC): 2x660MW coal fired power plant at Hub, (ii) Thar Energy Limited (TEL): 330MW mine-mouth coal fired power plant at Thar and (iii) Thalnova Power: 330MW mine-mouth coal fired power plant at Thar. CPHGC is being developed under a joint venture with China Power International Holdings Limited (CPIHL).
Cash flow streams of Hubco's plants are guaranteed by GoP under the Power Purchase Agreement (PPA), subject to adherence to the agreed upon performance benchmarks; this provides comfort to the ratings. Timely completion of new projects, settlement of receivable and payable and maintaining healthy debt service coverages are important.
