HUBCO’s Narowal Energy Revises Tariff Amid Profit Drop

Narowal Energy Limited (NEL), a subsidiary of Hub Power Company Limited (HUBCO), has formally signed the Amendment Agreement with the government, implementing key revisions in its tariff structure.

The agreement, effective from November 1, 2024, aligns with the government’s initiative to restructure independent power producers (IPPs) and introduces a ‘Hybrid Take and Pay’ tariff model. The revision impacts Operation & Maintenance (O&M) indexation, working capital costs, and insurance premium tariffs, capping the latter at 0.9% of EPC cost.

Under the revised terms, the return on equity component will be payable under the new hybrid model. Additionally, the government has agreed to withdraw international arbitration proceedings, while the Central Power Purchasing Agency (CPPA) will clear outstanding dues by April 2025. Late payment interest as of October 31, 2024, will be waived.

This agreement comes at a challenging time for HUBCO, as the company reported a 68% decline in profits, with earnings per share dropping from Rs11.78 to Rs3.25 in Q4 2024. Despite the downturn, HUBCO has announced a Rs5 per share cash dividend (50%) for its shareholders.