Lahore, May 06, 2022 (PPI-OT):China Power Hub Generation Company Private Limited (CPHGC) is a coal based 1,320MW 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 financial strength and experience in the energy chain of the sponsoring companies – CPIH and HUBCO reflect 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 Pakistani and Chinese governments, as this project is a priority project under CPEC.

The dedicated jetty at plant site and Coal Supply Agreement (CSA) with reputable international coal suppliers ensures the stable performance of the project. New O and M agreement is signed with, a joint venture between Hub Power Holdings Limited and China Power International Maintenance Engineering Company Limited. Management has put forth the requisition for true up tariff to NEPRA, the securitization at NEPRA’s end has already made, Company is expecting the finalization of tariff in 2022. The Company has successfully achieved all the performance benchmarks and provided 6,647GWh of electricity to the grid during CY21 against 6,939 GWh in CY20.

The Company recorded a turnover of PKR 100bln during CY21 (CY20: 104bln) and achieved a bottom-line of PKR 19bln in CY21 against PKR 35bln in CY20. DSRA is being funded through operating revenues. Company aims to issue a series of commercial paper amounting to PKR ~20bln in total, in order to manage the increasing price of imported coal in international market. This will be in addition to the short-term borrowings already utilized by the Company. Till 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 challenge to the cash flow management. However, the management supported by relevant business fundamentals remain committed to sustain timely debt repayments.

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