Hubco to acquire over one-third stake in ThalNova Power

Power plant is being set up at a cost of $498.3m; expected to start production by June 2021

KARACHI: Hub Power Company (Hubco), the oldest independent power producer in Pakistan, has expressed its intention to acquire over one-third of stake in half-a-billion-dollar ThalNova Power Thar project.

“Hubco intends to commence due diligence of ThalNova Power (Private) Limited to acquire not less than 37% of the total ThalNova shareholding,” Hubco Company Secretary Shaharyar Nashat said in a notification to the Pakistan Stock Exchange (PSX) on Wednesday.

The transaction is subject to corporate and regulatory approvals. Hubco’s share price increased 2.87% or Rs2.31 and stood at Rs82.67 with trading in 945,500 shares at the PSX. The share price of Thal Limited, which is one of the shareholders in the ThalNova power project, hit the upper price limit of 5% and surged Rs18.40 to Rs368.59 with 33,900 shares changing hands.

“Subject to completion of this transaction, Thal Power (Private) Limited shall possess 26% shareholding in ThalNova,” Thal Limited Company Secretary Umair Riaz Siddiqi said in a separate notification to the PSX.

“Thal Limited, through its wholly owned subsidiary Thal Power (Private) Limited, intends to dilute its shareholding in ThalNova Power Thar (Private) Limited in favour of Hubco subject to completion of due diligence,” he added.

Besides, Novatex Limited’s shareholding in the ThalNova joint venture would also be restricted to 26% after the stake purchase by Hubco, a source said. China Machinery and Engineering Corporation (CMEC), which is involved in engineering, procurement and construction of the project, and Descon Engineering Limited would continue to hold 10% and 1% stakes respectively in the joint venture.

ThalNova Power Thar Private Limited is a China-Pakistan Economic Corridor (CPEC) power project based on Thar lignite coal and is located at the power park site in Tharparkar district, Sindh.

The plant is being set up at a cost of $498.3 million, which includes 25% equity and 75% debt. It is expected to start commercial production by June 2021. The joint-venture partners are determined to arrange financing by first quarter of the next calendar year. “The joint venture has set the deadline of March 2019 for financial close of the project,” the source added.

As per the generation licence granted by the National Electric Power Regulatory Authority, ThalNova will supply electricity to the national grid for a period of 30 years.



The company would sell power at Rs3.67 per kilowatt-hour in the first 10 years of its operations. The tariff would come down to Rs1.91 per kilowatt-hour for the next 20 years.

The tariff comprises 38% return on investment and 48% debt servicing cost.

The project debt would be paid off completely in the first 10 years of operations.

Published in The Express Tribune, October 18^th, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.