HUBCO likely to cut its 2x660MW coal project by half

Author: Staff Report

KARACHI: China Power Hub Generation Company (CPHGC) announced Tuesday that it will likely to scale back its proposed 2×660 MW imported coal project to a single 660MW power plant due to timing issues for the implementation with the government.

CPHGC is a joint venture of China Power International Holding (CPIH) and Hub Power Company (Hubco) and the venture was setting up a new 2x660MW coal fired power plant (HPP), to be located slightly to the north of the estuary of the Hub River, Balochistan.

‘The Company’s 26 percent owned Joint Venture Company, CPHGC, which is undertaking 2x66oMW imported coal based power project at Hub Site, has been in discussion with the Government of Pakistan (GoP) on some potential improvement in the Required Commercial Operation Date (RCOD) of the 2x660MW Project as desired by the GoP. The potential implication of which could be Project getting reduced to 1x660MW, which would impact the Project,” said Shamsul Islam, Company Secretary at Hubco.

The company informed its shareholders through stock filing that since CPHGC is awaiting finalization of the decision from GoP, the Power Purchase Agreement (PPA) and the Implementation Agreement (IA) of the project have not yet been executed, which were required to be signed by October 1l, 2016 under the terms of Letter of Support issued by the Private Power Infrastructure Board (PPIB) to CPHGC. a“However, the partners, led by China Power International Holding (CPIH) which has 74% holding in CPHGC, are making all efforts to resolve aforementioned timing issue with the GoP” Islam added.

It is important to mention here that Logmarin, project’s feasibility report consultant, already said in the feasibility report of the project that target milestone of 2017 is not expected to be guaranteed as limitation in draft entailing restrictions to berth and the max vessel size, poor coal handling infrastructure, dependency on external traffic and other shipment relying on the same coal berths and no history of similar barging operations across the coast lines may impede bulk commodity supply to the power plant.

Research analyst at Elixir Securities Syed Manib Imam said any decision to reduce to 1x660MW will have a 5 percent negative impact on valuations at stock exchange which would reduce price targets for Hubco to Rs 113.5/share.

CPHGC had recently applied with National Electric Power Regulatory Authority (Nepra) for tariff adjustment for optimal Jetty design of its 2×660 MW imported coal project.

Earlier, in February, the regulator approved upfront tariff for coal-based power project of China-Hub Power Company at a levelised tariff of 8.36 cents (Rs8.12) per unit for 30 years.