Hub Power Company

active

The Hub River Power Plant was the first operational IPP in the South Asia region. The plant is a 1292-MW (4x323) oil-fired greenfield power plant. The Hub Power Company Ltd. (HUBCO) signed a 30-year PPA with Pakistan's Water Power Development Authority (WAPDA). Fuel will be supplied through a 78 km pipeline. The company has a fuel supply agreement from the Pakistan State Oil Company (PSOC) on a delivery or pay basis. The project is being financed through the Private Sector Energy Development Fund (PSEDF), which was funded by the Japan Exim Bank, the Bank of China and the World Bank. In 1988 the PSEDF approved a $150 million loan, partially financed by the World Bank ($144 million) through a loan to the Islamic Republic of Pakistan. In 1995, the PSEDF approved a second loan for $250 million, of which $114 million were funded by a World Bank loan to the government. The World Bank also approved a $240 million partial risk guarantee against specific political risks in support of a $360 million syndicated commercial loan in fiscal year 1992. This and the Uch Power project were the only two PPI power project guaranteed by the World Bank before June 1997. The plant has been selling power to WAPDA since 1996. As of June 30, 2009, the largest shareholders in the company were International Power (17%), Xenel (12%) and Fauji Foundation (9%). The remaining equity was held by private investors, local banks, international banks, insurance companies and mutual funds. The company was traded on the Karachi Stock Exchange. In Aug. 1999, Hubco reached an agreement with the Karachi Electric Supply Corp. (Kesc) to supply 500 MWe directly to Kesc instead of WAPDA. Hubco has faced problems in receiving payments for its electricity supply to WAPDA and has taken the case to the courts. In Dec. 2000, a settlement was reached: Hubco will received around US$100 million to cover previous underpayments, and the new tariff to be paid by WAPDA will be cut by 15%. Hubco agreed to a reduced tariff of 5.6 cents from the initial 6.62 cents. Capacity purchase price will be lowered from 4.45 cents to 3.36 cents per kilowatt hour. The new tariffs will start retrospectively, i.e., it will be adjusted from the first year of commissioning which was in July 1996. In first quarter 2001, lenders approved the company's settlement agreement with WAPDA. The company also requested that the government withdraw all criminal and legal charges against it, which the Pakistan government did in the second quarter of 2001. WAPDA agreed to accelerate payment of unpaid tariffs on the order of $93 million. WAPDA agreed to pay the full amount within 18 months. In Nov. 1999, National Power announced the split of its international and domestic operations, International Power was created.