ThalNova Power Thar Limited (TNPTL) is an Independent Power Producer (IPP) that has developed a 330 MW mine-mouth lignite-fired power plant at Thar Coal Block II, Sindh, under the China Pakistan Economic Corridor (CPEC). Operating on a Build-Own-Operate (BOO) basis, the plant commenced construction in 2019 and achieved its Commercial Operations Date (COD) on 17th February 2023. The project not only provides affordable indigenous electricity to the National Grid but has also created significant direct employment opportunities for the local communities of Thar and adjoining areas.

TNPTL has been awarded a levelized tariff of US¢8.5015/kWh (PKR 8.2550/kWh) by NEPRA for its coal power project, with a control period of 30 years from COD. The tariff is indexed to the PKR–USD exchange rate as well as US and Pakistan CPI inflation. It includes principal and interest repayments, return on equity, insurance, and fixed and variable O&M costs as adjustable components. Fuel costs along with all applicable taxes and levies are fully passed through to the power purchaser. For the quarter of July to September 2025, the capacity charges and energy purchase price stand at PKR 11.7554 and PKR 1.0420 per kWh, respectively.

TNPTL's key source of earnings would be the revenue generated through sale of electricity to the Power Purchaser, CPPA-G. The return on equity (ROE) in $ terms as per the tariff determination of the project is at 30.65%.

As of June 30, 2025, the ownership structure of ThalNova Power Thar Limited (TNPTL) comprised Hub Power Holdings Limited (HPHL) holding 38.3%, Thal Power (Private) Limited (Thal SPV) holding 26.0%, Nova Powergen Limited (Nova SPV) holding 24.7%, CMEC ThalNova Power Investments Limited holding 10.0%, and Descon Engineering Limited holding 1.0% of the total shareholding. All shares are fully paid ordinary shares carrying equal voting rights and entitlement to dividends.

Stability is underpinned by the long-term strategic investment of its sponsoring groups, including Hub Power Holdings Limited (HUBCO), Thal Power (Private) Limited, Nova Powergen Limited, China Machinery Engineering Corporation (CMEC) through CMEC ThalNova Power Investments Limited, and Descon Engineering Limited. This strong and diversified sponsorship ensures TNPTL’s long-term sustainability and operational resilience.

Sponsor groups have signicant experience in the development and operation of power projects, including coal- red, natural gas, and various renewable energies such as thermal, LNG, wind, solar, waste-to-energy, mine-mouth coal projects (with integrated production of coal and power).

Diversified across multiple sectors, Hub Power Holdings Limited (HUBCO), Thal Power (Private) Limited, and Nova Powergen Limited represent some of Pakistan’s leading business groups with strong financial foundations. Their partner, China Machinery Engineering Corporation (CMEC), contributes global engineering expertise and international project experience, while Descon Engineering Limited adds local industrial capabilities. Reinforcing this strength, HUBCO has recently committed USD 20 million in financial support specifically for ThalNova Power Thar to cover potential debt servicing shortfalls, ensuring the project’s financial sustainability and operational resilience.

ThalNova’s Board of Directors (BoD) comprises eight members, including seven non-executive members along with the Chief Executive Officer. Hub Power Holdings Ltd. is represented by three members, including the Chairman, Nova Powergen Ltd. and Thal Power Ltd. each have two representatives, while one member represents CMEC. The Board includes Mr. Muhammad Kamran Kamal (Chairman, Hubco Nominee), Mr. Aly Khan (Hubco Nominee), Mr. Amjad Ali Raja (Chief Executive Officer, Hubco Nominee), Mr. Muhammad Tayyab Ahmad Tareen (Thal Nominee), Mr. Muhammad Salman Burney (Thal Nominee), Mr. Rizwan Diwan (Nova Powergen Nominee), Mr. Saqib Haroon Bilwani (Nova Powergen Nominee), and Mr. Zhao Wenke (CMEC Nominee). The Company Secretary is Ms. Zamzam Sohail Kassamal.

Mr. Kamran Kamal is the Chairman of the Board of Directors of TNPTL and also the CEO of The Hub Power Company Limited (HUBCO). He has been associated with HUBCO Group in various capacities and brings vast experience of the local power sector. The remaining members also possess sufficient experience in their respective fields.

The board conducts regular meetings to discuss matters relating to the Company's operations and financials, along with providing supervision and granting approval for other policies of the Company.

The management ensures timely preparation of accounts along with proper maintenance of financial records, including invoices to the power purchaser. A.F. Ferguson & Co., Chartered Accountants (Category ‘A’), serve as the external auditors of the company.

IPPs are generally featured by a flat organizational structure, mainly comprising finance and technical staff, while the engineering, construction and operations of the plant are outsourced.

Mr. Amjad Ali Raja was appointed as Chief Executive Officer in July 2024. He has been associated with the HUBCO group since 2013 and brings over 22 years of experience in the energy sector, backed by an engineering background. The rest of the management team also holds the requisite qualifications and experience to effectively discharge their responsibilities.

The management is majorly engaged in operational matters relating to the Company including invoicing to CPPAG, internal audit, preparation of accounts and tariff determination while the plant's operations and maintenance are outsourced.

The management has established a robust internal audit function that ensures timely provision of data and reports. In addition, the operation and maintenance contractors regularly share updates with the management on plant operations, facilitating efficient oversight and smooth functioning.

ThalNova Power Thar Limited has entered into a 30-year Power Purchase Agreement (PPA) with the Central Power Purchasing Agency-Guarantee (CPPA-G), under which the plant supplies electricity in two components: Capacity Purchase Price and Energy Purchase Price. Under the terms, TNPTL invoices CPPA-G for both capacity charges (ensuring revenue even during periods of low dispatch or availability) and for energy supplied. The tariff structure is levelized over the 30-year control period starting from COD, incorporating Return on Equity (ROE), O&M costs, and other fixed cost components, while fuel costs, taxes, and levies are fully passed through.

ThalNova is equipped with European technology, with its Boiler, Turbine, and Generator designed and manufactured by General Electric (GE), ensuring high reliability and emission levels well below the limits prescribed by SEPA. This allows the plant to deliver electricity at highly competitive rates. To ensure efficient operations, TNPTL has entered into a long-term Operation and Maintenance (O&M) agreement with Hub Power Services Limited (HPSL), a subsidiary of the HUBCO Group, which also manages O&M for other plants within the group.

TNPTL has secured its fuel requirements through a 30-year Coal Supply Agreement (CSA) with Sindh Engro Coal Mining Company (SECMC), signed on May 13, 2017, ensuring uninterrupted coal supply for plant operations. Under the CSA, SECMC is entitled to receive capacity payments even during suspension periods, instances where the project company declines coal deliveries, or when the mine is unavailable due to forced, scheduled, or maintenance outages not linked to coal unavailability. Payments to SECMC are made within 30 days of invoice receipt, net of any liquidated damages or disputed amounts.

The coverage includes material damage, machinery breakdown, third-party liability, and business interruption/delay in startup losses, ensuring protection of both physical assets and revenue streams. In addition, contractors are contractually bound to pay Liquidated Damages (LDs) in the event that benchmark performance ratios are not achieved. These measures collectively mitigate operational and financial risks associated with unforeseen events, ensuring continuity of plant operations and revenue stability.

In FY25, Pakistan’s power sector generated approximately 127,160 GWh against an installed capacity of 45,888 MW, remaining broadly unchanged from the previous year and 6% below the reference target. Hydropower dominated the energy mix with about 31%, followed by nuclear at 18%, RLNG at 17%, local coal at 12%, imported coal at 7%, gas at 9%, and solar at 1% (rising to 5% when net-metered capacity is included). Local coal-based generation was recorded at nearly 15,547 GWh, while imported coal surged to 9,066 GWh, an 80% year-on-year increase, driven by more competitive dispatch. Net-metered solar capacity grew sharply to around 2,800 MW, reflecting a shift toward self-generation, while wind maintained a modest 3% share, constrained by curtailments and grid limitations. Demand projections for FY26, under both normal and high scenarios, indicate growth of 2.8% to 5%. Looking ahead, coal, particularly indigenous lignite from Thar, is expected to remain central to Pakistan’s energy security, although dependence on imported coal continues to expose the sector to global price volatility.

Net electrical output of the plant during FY25 stood at 1,768 GWh (FY24: 1,971 GWh) with a load factor of 67%. The power purchaser continues to source electricity from the plant on priority owing to its low generation cost.

The required availability for Thar Energy Limited under the PPA is 85%, while the required efficiency is 37%. During the period, the plant operated well above benchmarks, maintaining an average efficiency of 61.17% and meeting its contractual availability requirements

ThalNova Power Thar (Pvt.) Limited’s $526.6 million project is 75% debt-financed (USD 395 million) through a mix of foreign and local syndicates. A consortium of Chinese lenders, including China Development Bank (CDB), China Minsheng Banking Corporation Limited, and China Zheshang Bank, provided the majority share of ~70% of the total debt (USD 264.9 million), priced at 6M LIBOR plus 4.05% per annum. The remaining 30% was raised from a local banking syndicate led by Habib Bank Limited at 3M KIBOR plus 3.5% per annum. The debt is structured for repayment in twenty equal semi-annual installments, secured by project assets and shares. To date, the company has repaid approximately 15% of the project debt.

TNPTL, in its off-take agreement with CPPA-G, will receive capacity payments provided the plant meets contract availability, even if no purchase order is placed. As of June 25, 2025, the Company’s trade receivables from CPPA-G stood at PKR 16,218 million. Circular debt continues to pose challenges for companies operating in the power sector, compelling IPPs to manage their liquidity requirements through short-term borrowings and internal cash generation.

Due to rising trade receivables from CPPA-G, Gross Working Capital stood at 74 days as at end June 2024, which further increased to 108 days by December 2024 and reached 109 days as of June 2025. This upward trend reflects continued delays in receivable settlements, indicating a growing strain on the Company’s liquidity position. To manage these pressures, the Company has relied on a mix of internal cash generation and short-term bank lines. The sustained increase in working capital cycle underscores heightened dependence on external financing and highlights that future funding availability will remain closely tied to the payment behavior of the power purchaser.

During June 2025, the Company reported FCFO of PKR 25,191 million from the sale of electricity to CPPA-G, while EBITDA/Finance Cost stood at 2.4x. The cash flow position is expected to improve with increased generation in the coming period being expected, as the plant remains placed on priority in the merit order list. Comparatively, the Company had reported FCFO of PKR 25,176 million with an EBITDA/Finance Cost of 2.0x in FY24, and FCFO of PKR 12,082 million with an EBITDA/Finance Cost of 2.1x during Dec 24, reflecting an improvement in coverage and sustained cash generation.

As of June 2025, the Company’s leveraging stood at 62.8%, compared to 66.6% in Dec 2024, primarily attributable to long-term project debt. The decline reflects gradual debt repayments, leading to a stronger capital structure.