PACRA Maintains Entity Ratings of Hub Power Holdings Limited

The rating reflects the strength of Hub Power Holdings Ltd. ("HPHL" or "the Company"), a wholly-owned subsidiary of The Hub Power Company Limited (HUBCO), Pakistan's largest independent power producer with a total installed capacity of 3,581 MW. HPHL's portfolio includes significant stakes in two associated companies: ~47.5% in China Power Hub Generation Company (Pvt.) Ltd., (CPHG) which operates a 1,320 MW coal-fired power plant in Hub, Balochistan, and ~38.3% in ThalNova Power Thar (Pvt.) Ltd., which operates a 330 MW coal-fired power plant. Additionally, HPHL has a 50:50 joint venture with Prime International Oil & Gas Co. Ltd. (PIOG) focused on acquiring renewable energy and upstream assets previously held by ENI in Pakistan. HPHL also owns ~49% stake in China Power Hub Operating Company (Pvt.) Ltd., a joint venture responsible for the operations and maintenance (O&M) of the China Power plant. HPHL is strategically realigning its business portfolio through diversification into synergistic sectors. As part of this strategy, the Company has established a wholly owned subsidiary, Mega Motor Company (Pvt.) Limited (MMCL), with an equity injection of PKR 250 million during FY24. This investment was significantly enhanced in 6MFY25, with total equity contributions reaching PKR 2 billion. During 6MFY24, HPHL entered into a shareholders’ agreement with MCPL and MMCL, agreeing to offer a 50% equity stake in MCPL to MMCL upon the next share issuance. The Company also acquired a 50% stake in Ark Metals (Pvt.) Ltd., focused on mining and quarrying operations. In 6MFY25, HPHL established HUBCO Green (Pvt.) Ltd., a wholly owned subsidiary for developing and operating electric vehicle (EV) charging infrastructure. The Company’s revenue stream is primarily driven by its share of profit from associates and joint ventures. In FY24, the Company reported strong financial performance, with a 44% year-over-year increase in earnings contribution from associate entities. Additionally, the Company received dividend income of PKR 19.0 billion from CPHG during the year, which significantly strengthened HPHL’s liquidity position and overall financial profile. During 6MFY25, HUBCO received a settlement amount of PKR 36 billion, which was utilized to fully settle HPHL’s outstanding receivables. The proceeds facilitated the complete extinguishment of HPHL’s long-term debt obligations, reflecting prudent and effective liability management. As a result, the Company’s debt coverage metrics improved, supported by a significant reduction in finance costs. Additionally, the Company proactively retired all outstanding Sukuk obligations ahead of their scheduled maturity, further reinforcing its robust liquidity profile. HPHL's current low leverage position provides substantial headroom for future debt-raising capacity.
The ratings depend on timely materialization of projected timelines and generating cashflows. Consolidation of investments at holding company level and formalizing a strong and effective mechanism for monitoring performance will be critical, going forward. Change in the government policy for payment mechanism of power projects, along with any significant delay in envisaged cashflows due to the current power sector dynamics/constraints would impact ratings.

About the Entity
Hub Power Holdings Ltd. operates as a fully-owned subsidiary of The Hub Power Co. Ltd. It was established in 2015 as a publicly unlisted entity in accordance with the Companies Ordinance, 1984 (currently governed by the Companies Act, 2017). The primary focus of the company revolves around capitalizing on emerging prospects within the energy sector. The Board of Directors is chaired by Mr. Aly Khan, serving as Chairman. On the other hand, Mr. Kamran Kamal leads the company as CEO.