Hub Power Company (Hubco) has cleared a pivotal milestone in its long-running Thar strategy, with two mine-mouth coal plants – Thar Energy Limited (TEL) and ThalNova Power Thar (TNPTL) – reaching their Project Completion Date (PCD). The step, achieved on 31 October 2025, unlocks the ability for both projects to start distributing accumulated cash to shareholders and marks the latest wave of China–Pakistan Economic Corridor (CPEC) capacity additions feeding the national grid.
Hubco disclosed in a material notice that both TEL and TNPTL hit PCD “in accordance with the terms of their project financing documents,” a change in status that formally transitions the projects from construction risk into operations with distributable reserves. The two Thar Block-II units together contribute 660MW (two plants of 330MW each) to Pakistan’s installed base, reinforcing the coal-from-Thar pillar of the country’s energy mix.
Ownership is tightly held by familiar domestic sponsors. Hubco directly owns 60% of TEL, while Fauji Fertilizer Company (FFC) holds 30%. In TNPTL, Hubco has an indirect 38.3% stake via its wholly owned subsidiary HPHL, while the Habib family-controlled Thal Ltd owns 26%. Both plants are designated CPEC priority projects, reflecting their strategic role in displacing imported fuels with indigenous Thar coal. The PCD declaration also confirms that no “true-up” is required before PCD, removing an administrative uncertainty that could have delayed distributions.
With PCD achieved, management and lenders move to a different rulebook: dividends can now be declared when excess cash is available, and the initial pattern is expected to be semi-annual – with payments clustered around December and May as reserves build and debt-service cycles settle. Earlier guidance from management also discussed a twice-yearly cadence for TEL (around May and November), highlighting that exact months can vary by project documentation and cash-flow timing.
One lingering condition relates to the extension of Standby Letters of Credit (SBLCs) that Hubco had issued for cost-overrun protection during construction. Shareholders have already approved an extension of the SBLC tenor to as late as 2034, without a material cash outflow to Hubco, to satisfy lenders’ requirements while certain conditions are waived. The extended tenor is designed to cover potential disputed HVDC-related liquidated damages under the amended PPAs and any temporary debt-servicing shortfalls – insurance of a sort that keeps the projects bankable without hitting Hubco’s cash today.
For Hubco shareholders, the Thar PCDs are less about nameplate megawatts and more about cash yield. The company’s research guidance suggests TEL could remit around Rs8.0 billion to Hubco in FY26, normalising to Rs8.5 billion in FY27 as operating rhythms settle. TNPTL’s contribution is projected near Rs4.9 billion in FY26, normalising to Rs5.6 billion in FY27. Taken together, those inflows underpin an estimate that Hubco’s total dividend per share (DPS) could be around Rs15.0 in FY26, rising to Rs17.0 in FY27 – a step-up supported not just by current-year returns on equity, but also by accumulated cash reserves that the projects built during testing and ramp-up.
Two process notes matter for dividend visibility. First, management expects no tariff true-ups prior to PCD at TEL/TNPTL, which removes a common bottleneck for new IPPs trying to clear payables/recoveries before opening the dividend spigot. Second, management reiterated that TEL can distribute twice a year, while other assets in the Hubco portfolio have their own rhythms; for example, CPHGC historically pays once a year around May. These nuances affect quarterly cash planning and how swiftly parent-level DPS can be transmitted.
There is, however, a parallel thread of caution running through management’s expectations. At CPHGC (China Power Hub Generation Company), management is already recognising a contract liability based on its assumed tariff while NEPRA’s approved tariff differs. In the event of an adverse true-up, Hubco plans to seek a stay from the NEPRA tribunal; if that fails, the accounting adjustment would flow as a credit note against trade debts. This highlights the regulatory friction that can intrude on cash timetables even for operating plants, and it will be watched closely as Thar dividends begin.
In market terms, the Thar cash unlock dovetails with a valuation still tied to yields. As of this past week, Hubco was trading on a forward FY26 P/E of about 6.2x and P/B of about 1.2x, with an implied dividend yield near 6.9% – metrics that investors benchmark against both the sovereign yield curve and peer IPPs. The Thar distributions have the potential to lift the DPS and support that yield case even as other portfolio items cycle through tariff and receivables adjustments.
The arrival of another 660MW of base-load coal at a time of rapid solar adoption will add to a policy debate already simmering in Islamabad. On the one hand, mine-mouth Thar coal helps reduce imported-fuel exposure, stabilising generation costs and foreign-exchange outflows. On the other, Pakistan’s grid is contending with rising daytime solar output – from both utility-scale plants and rooftop/net-metered systems – which depresses mid-day demand for thermal units and pushes higher capacity payments onto consumers when base-load plants are dispatched below take-or-pay levels.
The arithmetic is simple, even if the solutions are not. Fixed capacity charges are meant to remunerate IPPs for availability, not just energy sold. As unutilised capacity rises – because load growth is soft, losses remain elevated, or net-metering shifts demand curves – unit tariffs can climb even when fuel costs fall. The two Thar units are mine-mouth base-load assets; they do not flex as easily as peakers and are designed to run steadily. In a system with oversupply in off-peak hours, this can intensify the pressure to either (i) curtail solar at times, (ii) improve grid flexibility and storage, or (iii) accelerate industrial demand-side reforms to soak up generation. Policymakers have already floated combinations of these, but implementation lags mean near-term pain tends to land as higher consumer bills and circular-debt stress.
Hubco’s own management recognises this evolving landscape, which is why the company has been building an adjacent EV-charging and mobility strategy (more below) and evaluating grid-supportive investments through its holding platforms. Still, for FY26–27, the near-term financial impulse from Thar will be positive for Hubco’s cash flows even as the grid-level optimisation challenge becomes more complex.
No discussion of Hubco is complete without its contractual dance with the state. Pakistan’s power market remains effectively a single-buyer system, with CPPA-G purchasing from IPPs and selling onward to DISCOs. This structure has long produced payment delays, late payment surcharge (LPS) accruals, and periodic renegotiations of tariff structures and term sheets.
Recent management commentary underscores that LPS waivers for CPEC IPPs remain an unresolved, government-to-government issue, with no concrete progress reported from the latest bilateral meetings. The uncertainty matters for cash and accounting, because waiving LPS accruals would alter receivables valuations and could ripple through dividend decisions. At the same time, the CPHGC tariff true-up saga illustrates the regulatory exposure even for mature projects: the company is booking a contract liability based on its own view of the tariff, prepared to seek tribunal relief if NEPRA’s determination goes against it, and, failing that, to net the impact against trade debts. These items, while technical, feed directly into working-capital draw and payout capacity at the parent.
There are also asset-specific pivots underway at the Hub base plant. Management had floated an RFP to dispose two units, but that plan has been shelved due to increased competition from other GENCOs driving lower scrap prices. The remaining two units have been earmarked for coal conversion to supply K-Electric, though management cautions the conversion will take time. Meanwhile, the land tied to the project is restricted to industrial uses, limiting near-term monetisation through real-estate repurposing. In parallel, HPHL (a Hubco subsidiary) is evaluating greenfield new-energy investments and has signed an MoU with Pakistan State Oil (PSO) to explore a Single Point Mooring (SPM) and oil terminal at Hub for white-oil supplies into the northern load centres – an infrastructure bet that could complement the company’s generation footprint.
Another thread is coal supply risk and option value at the mine. Hubco disclosed that it invested Rs5.4 billion to acquire an additional 9.5% stake in Sindh Engro Coal Mining Company (SECMC), taking its holding to 17.5%, although completion has stalled pending the non-completion of a related Engro transaction. SECMC’s Phase 3 financial close is targeted by end-CY25, with COD the following year – timelines that, if held, would deepen the mine’s economies of scale and potentially lower all-in delivered coal costs for Thar plants over time.
All of the above puts Hubco at the centre of Pakistan’s contract and policy transition: accruing new base-load cash flows from Thar, while navigating legacy base-plant decisions, regulatory true-ups, and a shifting fuel and demand mix.
Amid the coal build-out, Hubco is simultaneously making a mobility and electrification bet with BYD of China, aiming to localise assembly and help seed the charging backbone that could, in time, lift off-peak electricity demand. Management says the CKD plant is expected to be operational by 4QFY26. To date, the company has incurred roughly USD 10mn in capex on the programme, with the bulk of spending to occur over the next four to five months once LCs open for the EPC contract. Funding lines are largely in place: $90 million of debt has been drawn, and the $30 million equity requirement is to be funded internally. Early market interest in BYD’s Shark model has been described as “very encouraging,” a positive, if still anecdotal, read-through for initial volumes.
The tax environment is a modest tailwind: sales tax on EV CKD/CBU units is 1%, an incentive structure that supports early adoption while local content and scale build. On the charging side, Hubco (through HUBC Green) plans to co-own and co-operate EV charging stations (EVCS) with oil marketing companies, splitting profits 50:50. The initial EVCS capex is around Rs400 million, with a long-distance network design: chargers spaced roughly every 100 kilometres on motorways and highways. Management is realistic about the ramp, projecting low utilisation initially that improves as the fleet base grows. The focus on inter-city corridors rather than urban kerbside fits the current bottleneck – range anxiety on long trips – and taps into sites where OMCs already hold real estate and traffic.
Strategically, the BYD/EVCS push is more than a diversification headline. If Pakistan’s daytime solar continues to expand, EV charging – especially off-peak or managed charging – could absorb surplus electrons, flatten demand curves, and soften capacity-payment pressure. Hubco, as both a generator and a charging-network investor, would then be positioned on both sides of the meter, participating in value created by a more flexible, electrified transport system.
The immediate story for Hubco is cash. With TEL and TNPTL now through PCD and semi-annual dividends expected from their accumulated reserves and ongoing operations, the FY26–27 DPS outlook strengthens materially, subject to routine constraints around receivables and regulatory synchronisation. No pre-PCD true-up and a SBLC extension that does not require cash out today provide the procedural clarity lenders and sponsors need to move into a steady state.
The second-order story is systemic. Pakistan’s grid must integrate new base-load while accommodating rapidly growing solar. That means dispatch rules, storage pilots, demand-side incentives and distribution-loss fixes will matter as much as fuel choices in determining the consumer tariff path and the circular-debt trajectory. In this setting, investors will pay attention to how quickly Thar plants reach cash-distribution cadence, the evolution of CPHGC’s tariff true-up, the pace of SECMC Phase 3, and early signals from BYD CKD/EVCS capex and partnerships.
Hubco has rarely been a simple utility story; it has been a proxy for Pakistan’s broader energy-sector bargain: sovereign-anchored cash flows meeting regulatory and demand-mix volatility. With two more Thar anchors now online – and a transport-electrification venture set to come onstream in due course – the company’s next chapter will hinge on how deftly it converts megawatts into sustainable dividends while helping the grid turn oversupply into opportunity.
If the cash arrives on the timetable management has sketched, Hubco’s Thar bet will start paying out just as the company leans into a mobility strategy designed to grow the grid’s demand side. That combination – new base-load cash, contract discipline, and EV-enabled offtake – could define Hubco’s investment case over the next two financial years.
