HUBCO plans to convert two units of Hub plant to coal

KARACHI: Hub Power Company (HUBCO) is considering converting two units of its base plant to coal from furnace oil, and selling electricity to K-Eelectric. The 1,208MW Hub Plant consists of four units.

“Management explained that cost of electricity would be cheaper for K-Electric instead of setting up a new plant, as HUBCO’s base plant has repaid its debt,” Muhammad Ahmad at Insight Securities noted in a HUBCO’s analyst briefing report.

HUBCO is the first and largest Independent Power Producer (IPP) in the country with a combined installed power generation capacity of 2,920MW.

HUBCO’s consolidated earnings per share (EPS) for the nine-month period in FY20 stood at Rs14.07 as compared to Rs7.16 in the same period last year. This was mainly attributable to rupee depreciation due to exchange rate indexation mechanism in determining profitability, lower overhaul and maintenance charges, project management income from Thar Energy Limited (TEL) post financial close, and commencement of share of profits from China Power Hub Generation Company (CPHGC).

The management informed the analysts briefing that due to COVID-19 pandemic, force majeure event was issued by engineering, procurement, construction (EPC) contractors of both TEL and ThalNova Power Thar Pvt Ltd (TNPTL).

Construction is in progress albeit at slow pace. “Management expects that TEL would be commissioned in Q22021 as 55 percent of the total construction has been completed. Similarly TLNPL is expected to be operational in Q12022, as 23 percent of construction is completed till now,” Ahmad said.

HUBCO management termed the IPP report by the commission unilateral, as the view of IPPs had not been taken by the commission. Moreover, management refuted exorbitant profiteering allegations by citing that return on equity (ROE) component constituted little part of the tariff.

The power company’s management has expressed conditional consent to become part of government’s efforts to bring down electricity prices contingent upon many other steps beyond the scope of IPPs ie, limiting transmission and distribution losses.