KARACHI: Hub Power Company (Hubco), Pakistan’s largest independent power producer, is seeking an extension of \$51 million in bank guarantees to ensure the continued operation of its coal-fired power plants amid evolving energy sector dynamics and rising solar adoption.
In a notice to the Pakistan Stock Exchange, Hubco announced its plan to extend the duration of these guarantees—previously short-term—until 2034. The extended backing aims to cover future loan repayments and potential penalties, helping secure the financial stability of its two 330-megawatt plants that run on locally mined coal.
The move comes as Hubco contests newly imposed government transmission charges, which it claims were not part of the original agreements. These charges have heightened financial uncertainty, prompting investors to support a longer guarantee period. Despite the cost of borrowing for these guarantees, the company noted that expected returns from the projects remain favorable.
To date, Hubco has invested approximately \$131 million in the coal power plants. An extraordinary general meeting is scheduled for August to seek shareholder approval for the extension plan, which the company says is vital to ensuring uninterrupted operations.
The development highlights broader issues facing Pakistan’s energy sector. As part of an International Monetary Fund (IMF) reform package, the government last year approved early termination of certain power supply agreements to reduce mounting energy sector debt.
By Reuters
