Hubco plans Rs6bln sukuk in November

KARACHI: Hub Power Company (Hubco), the country’s largest independent power producer, planned to raise Rs6 billion through sukuk to meet its working capital requirements in view of mounting receivables and after exhausting credit lines, an official said on Monday.

“The company plans to launch the Islamic instrument by the mid of November 2020,” said the official. “These funds will be utilised to meet the ongoing capital requirements of the company.”

The official said Hubco’s receivables mounted to approximately Rs90 billion, which is affecting

expansion plans and ongoing projects. “Hubco is a profitable company, but due to choking cash flows, it is getting difficult to meet the working capital requirements,” said the official. “We have been relying on bank financing, but banks have a limit of exposures towards us.”

The proposed sukuk in the sum of Rs6 billion for a tenor of five years will be available for subscription by financial institutions, investment companies and other eligible institutions. Meezan Bank will be the shariah advisor and Arif Habib Limited will be its arranger.

With an aggressive growth planand focus on growing the shareholder value, Hubco is pursuing opportunities in the domain of thermal energy, alternate energy and water treatment.

Hubco has an installed capacity of producing over 2,920 megawatts through its four plants in Hub, Narowal and Azad Kashmir. HUBCO is the only power producer in Pakistan with four projects listed in the China-Pakistan economic corridor framework: imported coal-based China Power Hub Generation Company (Private) Limited at Hub, Thar Energy Limited and Thalnova Power Thar and Sindh Engro Coal Mining Company at Thar Coal block-II.

Both the 330MW power plants in Thar block II have achieved their financial close and are expected to meet commercial operations dates in 2021 and 2022, respectively. Being a domestic source of energy fuel, the power generation and mining projects in Thar Coal are expected to fortify the energy security of the country and would bring about substantial savings in foreign exchange of the country.