Hub Power Company Sets Ambitious Path Forward with Key Developments in FY24

Staff Report: As Hub Power Company (HUBC) unveils its financial performance for FY24, the company is not just sharing impressive dividends but also laying out a bold vision for the future. From major investments in renewable energy and electric vehicle infrastructure to strategic partnerships in mineral exploration, HUBC is positioning itself as a key player in Pakistan’s evolving energy landscape. Here are the crucial takeaways from their latest corporate briefing.

Hub Power Company (HUBC) held its corporate briefing to discuss FY24 financial results and future outlook.Ke, Hubco Ink MoU to Export Offtake of Electricity

The company declared a quarterly dividend of Rs8.5/share. This dividend was supported by improved internal cash generation following a dividend of Rs10 billion from China Power Hub (CPHGC) in May 2024.

HUBC’s joint venture, CPHGC, disbursed its second dividend of US$80 million in May 2024. The total dividend received during FY24 amounted to US$150 million, of which HUBC’s share was US$69 million.

A BYD plant is planned to be established in Karachi, with operations commencing in 2026. Bookings for BYD imported cars will begin in the fourth quarter, with deliveries targeted as soon as possible.

Charging infrastructure will be developed across a combination of city and highway locations, with initial discussions underway with leading oil marketing companies (OMCs) to cover critical areas. The charging time for commercial chargers is expected to be competitive, with sufficient chargers available before the cars are released.

HUBC’s overdues were almost at the same level as last fiscal year (FY23), and as of June 30, 2024, they were: HUBC Rs53 billion, Narowal Rs10 billion, Laraib Rs4.7 billion, CPHGC Rs72 billion, and TNL and TEL around Rs6.5 billion each.

The management stated that HUBC will only make payments to Pakistan State Oil (PSO) if successful collection of overdue amounts is received from the Central Power Purchasing Agency (CPPA).

The company plans to renew its Memorandum of Understanding (MoU) with K-Electric (KE) for converting its plants to Thar coal-based power plants, as part of the strategic plan for HUBC’s base plant.

SECMC Phase III is expected to be completed by December 2025, with coal supply allocated to Lucky Electric.

The effective tax rate for HUBC increased to 16.3% in FY24 on a consolidated basis due to taxable income from deposits. The company had deposits in savings accounts, and the interest income generated from these deposits was subject to taxation, contributing to the higher tax rate.

Through a joint venture agreement with Ark Metals (Pvt.) Ltd., the company plans to explore and develop mineral mines in Pakistan. The exploration phase is currently underway and is expected to be financed internally.

If needed, the company may reduce dividends or take loans to finance the BYD plant and Ark Metals’ exploration projects.

HUBC, through its wholly owned subsidiary Hub Power Holdings Limited (HPHL), has been prequalified for KE’s 200MW wind/solar hybrid project and the 150MW + 120MW Sindh Solar Energy Project (SSEP) for power off-take by KE. HUBC is actively participating in bid submissions for these renewable energy projects.