The Hub Power Company is the largest Independent Power Producer (IPP) in the country with a combined power generation capacity of over 1600 MW. The company is listed on the Pakistan Stock Exchange along with its Global Depository Receipts (GDRs) also listed on the Luxembourg Stock Exchange. The Hub Plant in Balochistan is one of the most efficient steam turbine based thermal power plants in Pakistan, and it supplies electricity to the National grid. The Narowal Plant is an oil-fired, engine based, combined cycle thermal power station, located in Punjab. The firm also holds 75 percent controlling interest in Laraib Energy Limited which owns and operates an 84 MW run-off-the river hydel power plant near Mangla Dam in Azad Kashmir.
Hub Power Company is looking to expand and has incorporated wholly owned subsidiaries for its future development plans. Hub Power Holding Limited has been incorporated to invest in the coal based 2x660 MW power project while Hub Power Services Limited has been incorporated to take over the O&M of the Hub Plant and upcoming coal plant.
Operational highlights FY15
The Company took advantage of the China Pak Economic Corridor and established a joint venture with China Power International Holdings to install two 660 MW coal power plans at the existing Hub plant site in Balochistan.
The second joint venture undertaken by Hub is in the Sindh Engro Coal Mining Company (SECMC) with Engro and the Government of Sindh as partners. The objective would be to increase production from the Thar coal mines in order to reduce on imported coal.
During FY15, Hub Plant maintained an uninterrupted power supply to the national grid. It generated 6,810GWh of electricity compared to 7,087GWh in FY14, which is a load factor of 65 percent compared to 67 percent. The decrease in generation was caused by ongoing maintenance work on the boilers.
The Narowal plant generated 1,418GWh of electricity compared to 1,562GWh last year, which is a load factor of 76 percent versus 83 percent in FY14. Lower generation was attributed to the restriction imposed by the National Power Control Center.
The hydel plant Laraib generated 489GWh of electricity compared to 470GWh in FY14, which is at a load factor of 66 percent compared to 64 percent previously. Higher generation, for the 9 months under review was due to better hydrology received from Mangla Power Plant and significant reduction in the number of annual maintenance days, as compared to the same period last year.
Snapshot in FY16
The consolidated EPS for the 9MFY16 decreased to 7.21 compared to 7.22 last year. The decline was attributed to effect of the impact of interim relief provided to Laraib Energy Limited last year in the course of the LEL tariff reconciliation process. Moreover, share of loss from associates, higher repair and maintenance due to boiler rehabilitation work and lower LEL revenue because of lower tariff by NEPRA also contributed to the lower EPS for the period under review.
HUBCO reported an unconsolidated net profit of Rs 8280 million with an EPS of Rs 7.16 for the 9MFY16 period as compared to Rs 6561 million with an EPS of Rs 5.67 last year. The profitability increment was a result of the dividend received from LEL along with savings due to self-operation and maintenance of Hub Plant and higher repair and maintenance expenditure due to boiler rehabilitation.
Outlook
Promising growth initiatives suggest a strong expansion with the setting up a 330MW coal power plant at Thar. The CEO of Hubco also announced that the construction of two 660-megawatt imported coal-based power plants worth $1.8 billion in Hub, Balochistan were to begin in the third quarter of this year. The project will be a joint venture between Hub Power Holding Limited and China Power International Investment Limited. The Balochistan Environmental Protection Agency (EPA) has granted a no-objection certificate for initiating work on the power plants.
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