OREANDA-NEWS. January 28, 2015. Hub Power Company (Hubco) sees the potential of setting up 3,600-megawatt power plants based on coal in Hub, which will ease crippling shortages and provide cheaper electricity to consumers.

“We can develop 3,600MW coal-run power projects in Hub whereas plants based on liquefied natural gas (LNG) should be set up in Punjab following a dip in prices,” said Khalid Mansoor, Chief Executive Officer of Hubco, at a press conference.

Hubco’s board of directors has given its management the mandate to establish two coal-run power plants with generation capacity of 660MW each and later four more plants of almost the same capacity.

Initially, it will bring imported coal to run the plants as well as set up a coal jetty for handling supplies. Later, the company will switch to Thar coal. Mansoor revealed that the government of Pakistan and Chinese banks had agreed to set up a revolving fund to keep money in circulation equal to the value of invoice for a month.

This fund will help avert payment issues due to circular debt in the power sector and make available loans for the Thar coal extraction project. Chinese banks have also accepted government guarantees.

The National Electric Power Regulatory Authority (Nepra) had capped upfront fee for Sinosure, an export credit insurance company of China, at 7%, but because of the presence of circular debt, the company asked for 9% for credit risk insurance. “Now, the issue has been resolved and China has agreed to cap the fee at 7%,” Mansoor said.