Lahore, June 06, 2022 (PPI-OT):The rating reflects Hub Power Holdings Limited’s (‘Hub Power Holdings’ or ‘the Company’) holdco structure with focus on expanding energy generation capacity through indigenous resources. The Company is a wholly owned subsidiary of The Hub Power Company Limited (HUBCO), a very strong player in Pakistan’s energy sector with a generation capacity of 1,292MWs. Hub Power Holdings has invested in China Power Hub Generation Co. (Pvt.) Ltd. (47.5%) and ThalNova Power Thar (Pvt.) Ltd (38.3%).
The Company has also entered in a JV agreement to form Prime International Oil and Gas Company Ltd (a 50:50 joint venture company of Hub Power Holdings and ENI’s local employees), has executed definitive agreements to acquire all the upstream operations and renewable energy assets owned by ENI in Pakistan. The investments are funded through a combination of equity and debt, as per sector’s norm. However, the debt was raised at the group level and the Company’s capital structure remains predominantly equity financed. Business risk profile of the Company consists solely of profit share from associate, China Power, only; which is constantly receiving generation payments.
However, the projected dividend declaration from China Power relies on tariff true-up, which is not yet achieved. Secondly, ThalNova Power has achieved financial close and is expected to become commercially operational in Sep-22. While, Prime International is at the initial gestation phase. The Company has a strong financial profile with the majority of its commitments, as a holding company, have already been met for its existing portfolio.
The Company issued a Sukuk of PKR 6bln on Nov-20 mainly to settle debt at group level and is fully guaranteed by HUBCO. Profit and principle repayments are aligned with dividend inflows with sufficient cushion in initial years. Consolidation of investments at holding company level and formalizing a strong and effective mechanism for making investment and monitoring performance will be critical, going forward.
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