HUBCO proposes $51mn investment in Thar-based coal projects
The IPP disclosed the development in a notice to the Pakistan Stock Exchange (PSX) on Wednesday, ahead of an Extraordinary General Meeting (EGM) scheduled for August 7, 2025.
HUBCO shared that its board has approved special resolutions to extend the Sponsor Support Contribution Letters of Credit (SSC LCs) for both projects.
The company seeks these extensions to address funding requirements and potential debt servicing shortfalls as the projects approach critical operational milestones.
Pakistan's largest IPP HUBCO posts Rs20.3bn profit in 1QFY25 despite revenue dip
'The purpose of the extended tenor of the SSC LC would be to cover: (i) any LDs determined to be payable by TN under its amended PPA on account of payment of High Voltage Direct Current (HVDC) charges under certain conditions. Such charges levied by CPPA-G have been disputed by TN, however, following conclusion or resolution of this dispute, any payable amount would remain a sponsor liability (in proportion to its share under the SSA); and (ii) shortfall in debt servicing, pursuant to the conditions stipulated in the SSA (in proportion to its share under the SSA). In such case, the Sponsors would be required to inject such funds, either in the form of equity and / or subordinated debt,' read the notice.
As per the notice, HUBCO seeks shareholder approval to provide or extend a guarantee of up to $31 million in favour of Thar Energy Limited (TEL), a 330MW mine-mouth coal-fired power plant located at Thar Block II. HUBCO owns a 60% stake in TEL.
Similarly, the IPP intends to offer a further $20 million in guarantees to ThalNova Power Thar (Private) Limited (TN), a 330 MW mine-mouth coal-fired power plant established at Thar Block II, Thar Coal Mine, Sindh.
HUBCO, through its wholly owned subsidiary, Hub Power Holdings Limited (HPHL), presently holds 38.3% shares in TN.
The guarantees will be structured either as equity or subordinated debt.
HUBCO stated that the tenor of the support will be extended until January 2034 for TEL and July 2034 for TN, or until the end of each project's loan term, whichever is later.
The IPP was of the view that achieving completion for both projects marks a significant milestone that would allow them to generate distributable surplus and pay dividends.
The company shared that it has already invested approximately $79 million in TEL and $52 million in TN, and both projects operate under the Government of Pakistan's 2015 Power Policy, which offers a 20% return on equity in USD terms.
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