HUBCO to Bolster Thar Coal Projects with $51 Million Investment

The Hub Power Company Limited (HUBCO), a prominent Independent Power Producer (IPP) in Pakistan, has revealed intentions to augment its financial commitment to two significant Thar-based coal ventures: Thar Energy Limited (TEL) and ThalNova Power Thar (Private) Limited (TN). The proposed investment could reach up to $51 million, which is about Rs14.61 billion.

This development was communicated to the Pakistan Stock Exchange (PSX) in a notice released on Wednesday, prior to an Extraordinary General Meeting (EGM) that is slated for August 7, 2025.

HUBCO indicated that its board has sanctioned specific resolutions to prolong the Sponsor Support Contribution Letters of Credit (SSC LCs) for both undertakings.

The company is pursuing these extensions to fulfill funding demands and address possible deficits in debt servicing as the projects move closer to crucial operational phases.

Details of the Support

According to the notice, “The extended duration of the SSC LC is designed to cover: (i) any Late Delivery damages (LDs) deemed payable by TN under its revised Power Purchase Agreement (PPA) due to High Voltage Direct Current (HVDC) charges under particular circumstances. While TN has contested these charges imposed by CPPA-G, any payable amount following the resolution of the dispute will remain a sponsor liability, proportional to their share under the SSA; and (ii) any shortfall in debt servicing, based on the stipulations in the SSA and proportional to their share. In such instances, the Sponsors will be required to inject funds as equity or subordinated debt.”

HUBCO is seeking shareholder endorsement to offer or extend a guarantee of up to $31 million for Thar Energy Limited (TEL), a 330MW mine-mouth coal-fired power facility situated in Thar Block II, where HUBCO possesses a 60% ownership stake.

Similarly, the IPP plans to provide an additional $20 million in guarantees to ThalNova Power Thar (Private) Limited (TN), another 330 MW mine-mouth coal-fired power plant located in Thar Block II, Thar Coal Mine, Sindh.

Through its fully owned subsidiary, Hub Power Holdings Limited (HPHL), HUBCO currently holds a 38.3% stake in TN.

The guarantees will be structured as either equity or subordinated debt.

HUBCO specified that the support’s term will be extended until January 2034 for TEL and July 2034 for TN, or until the end of each project’s loan term, depending on whichever comes later.

The IPP believes that the successful completion of both projects represents a noteworthy accomplishment, enabling them to generate distributable surplus and issue dividends.

The company mentioned it has already invested roughly $79 million in TEL and $52 million in TN, with both projects operating under the Government of Pakistan’s 2015 Power Policy, which provides a 20% return on equity in USD terms.