HUBCO expands beyond power, eyes EVs, mining, and energy infrastructure

Hub Power Company Limited (HUBCO), Pakistan’s largest independent power producer, is gearing up for a diversified expansion beyond power generation—venturing into electric vehicles, mining, and energy infrastructure—as it benefits from improved recoveries and reduced finance costs.

In recent meetings with brokerage houses including Toplne Securities and Arif Habib Limited, HUBCO’s CEO Kamran Kamal and CFO Muhammad Saqib offered detailed insights into the company’s operational performance, dividend prospects, and future plans.

Circular debt and LPS waiver

The company management said it had no knowledge of progress regarding the waiver of the late payment surcharge (LPS) on CPEC power projects during recent government-to-government (G2G) talks. Any future resolution on the matter, they noted, would need to be decided at the Joint Cooperation Committee (JCC) level, as these projects are under CPEC.

Despite the persistent circular debt issue, recoveries have improved, particularly for coal-based plants, aided by the timely release of subsidies and a reduction in interest rates. This has contributed to a decline in the company’s finance costs.

Dividend outlook

The management expects the project completion date for its two coal-based subsidiaries—ThalNova and TEL—to materialize within the current quarter. Once achieved, both companies would be able to declare dividends, with the first expected to exceed their return-on-equity (ROE) component.

Unlike CPHGC, which pays annually, TEL and ThalNova may pay dividends biannually.

Base plant redevelopment

HUBCO is exploring redevelopment options for its 1,100-acre base plant site in Hub, Balochistan. One proposed project is an aluminium smelter, which would leverage Pakistan’s estimated 200 million tons of bauxite reserves. The site’s existing sea and land connectivity could allow easy alumina imports and integration of the value chain.

Another initiative under consideration is a Single Point Mooring (SPM) system to import petroleum products for PSO. HUBCO has signed an MoU with PSO and plans to form a joint venture for the project. Products would be transported inland via the Asia Petroleum Pipeline to connect with the White Oil Pipeline system.

EV expansion via BYD

HUBCO’s partnership with Chinese EV giant BYD is gaining traction. The management reported strong demand for the BYD Atto 3 and said local assembling of BYD vehicles would begin in the second half of 2026. Capex of $10 million has already been incurred, with further investments contingent on the opening of LCs for EPC work.

The company has drawn $90 million in debt financing and plans to meet the $30 million equity requirement internally. Management confirmed that BYD’s full vehicle range—from compact cars to luxury SUVs—may be introduced later, with initial offerings focused on C-segment vehicles.

To support adoption, HUBCO is developing Pakistan’s first large-scale EV charging network from Karachi to Peshawar. The project, jointly owned with OMCs under HUBCO Green, will include stations at 100-kilometre intervals along major highways. Initial investment is estimated at PKR 400 million.

Future EV exports

Management said exports of right-hand-drive BYD vehicles are a long-term possibility, though current focus remains on plant development.

Sales tax on EV CKD and CBU units currently stands at 1%, offering a strong incentive for growth.

Investments in mining and E&P

In line with its diversification strategy, HUBCO has invested in junior mining firm Ark Metals (Pvt.) Ltd. and is evaluating additional opportunities, including participation in the privatization of Pakistan International Airlines (PIA) as part of a consortium.

The company’s joint venture, Prime International Oil & Gas, is also set to participate in Pakistan’s upcoming offshore bidding round, as recovery in that segment improves on the back of higher gas prices and a stable rupee.

SECMC stake and expansion

HUBCO recently acquired an additional 9.5% stake in Sindh Engro Coal Mining Company (SECMC) from HBL, taking its total holding to 17.5%.

However, the transaction is on hold pending regulatory approval and completion of a related deal by Engro.

Phase 3 of SECMC’s expansion is targeting financial close by end-2025.

Analysts see HUBCO’s strategic shift as a proactive response to the evolving energy landscape and capital market expectations.

“HUBCO is no longer just a power utility, it’s positioning itself as an integrated energy and infrastructure company,” said an analyst. “While power generation remains the core, they’re clearly targeting higher-margin and future-ready sectors like EVs, mining, and logistics.”

He added that improved recoveries and the dividend outlook for TEL and ThalNova could lift near-term investor sentiment.
However, challenges remain, particularly around tariff risks and unresolved circular debt issues.

“Any adverse ruling on tariff true-ups, especially for CPHGC, could hit receivables and earnings,” the analyst said.

Still, the company’s debt profile remains stable, and the pivot toward diversification may help mitigate sector-specific volatility in the long run.