January 7, 2022: The Pakistan Credit Rating Agency Limited (PACRA) has maintained ratings of China Power Hub Generation Company Private Limited (CPHGC) at ‘AA+’ for the long term and ‘A1+’ for the short term with a stable outlook, a press release issued by rating agency said.
The financial strength and experience in the energy chain of the sponsoring companies – CPIH and HUBCO reflect positively in the ratings.
To note, CPHGC is a coal-based 1320MW power plant and jetty (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 rating takes comfort from the company's strategic importance to the 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 the plant site and Coal Supply Agreement (CSA) with reputable international coal suppliers ensure the stable performance of the project.
The company has successfully achieved all the performance benchmarks and provided 5,500GWh of electricity to the grid during 9MCY21 against 5,214 Gwh in 9MCY20.
The company recorded a turnover of PKR 80bln during the 9MCY21 (9MCY20: 79bln) and achieved a bottom-line of PKR 22bln in 9MCY21 against PKR 26bln in 9MCY20. DSRA is being funded through operating revenues. To date, the Company has repaid four installments (i.e., ~14%) of its project-related long-term debt. However, the leverage is yet sizeable and will gradually decline along with the life of the project.
Maintaining healthy debt service coverages remain important. Accumulation of circular debt may pose a challenge to cash flow management. However, the management supported by relevant business fundamentals remain committed to sustaining timely debt repayments.