China Rejects Waiver on Rs423bn CPEC Power Dues: Hub Power Stock in Focus

What China's Rejection of the CPEC Dues Waiver Changed

Pakistan's unpaid bills to China backed power projects under the China Pakistan Economic Corridor have climbed to about Rs423 billion by the end of FY2025-26. Chinese lenders and independent power producers have refused to waive roughly Rs170 billion of that amount, which has built up as a late payment surcharge on overdue bills. The remaining Rs260 billion is outstanding energy purchase payments owed directly to the plants for power already supplied.

Among the largest individual amounts are Rs85 billion owed to the Sahiwal coal plant, Rs76 billion to Port Qasim Power Plant, Rs64 billion to the Hub Power plant, and Rs54 billion to the Thar Coal Block-I project, with smaller sums owed to several other CPEC energy and transmission projects. Islamabad is trying to arrange up to 10 billion dollars in cheaper foreign financing to refinance this expensive power sector debt and pull tariffs down, but China's refusal to write off the surcharge means the underlying dues keep growing in the meantime.

Why Hub Power Stock Is in Focus

Hub Power is Pakistan's largest independent power producer and one of the plants from the early CPEC era still waiting on a chunk of what it is owed. Its business model already runs on capacity payments from the government rather than pure electricity sales, so its cash flow depends heavily on how quickly those payments actually arrive. A growing, unresolved pile of dues, now with China refusing to forgive the surcharge portion, signals that the wait for cash is not getting any shorter.

This is not a new problem for Hub Power; circular debt in the energy chain has weighed on the company for years. What is new here is confirmation that a negotiated write off is off the table for now, and that the government's fallback plan of cheaper refinancing is still being arranged rather than finalised.

Which Stocks, and Why

Hub Power is named directly in the report as owed Rs64 billion, so the impact on it is a direct one rather than an inferred link. The other large amounts, owed to the Sahiwal, Port Qasim, Thar Coal Block-I and Matiari Lahore transmission projects, sit with power companies and a transmission line that are not listed on the PSX, so they do not translate into a separate stock impact here. Engro Powergen Thar is also named in the report but is a distinct, unlisted project from Engro's listed fertilizer and holding companies, so it is left out too.

For Hub Power, the practical effect is that a portion of its receivables from the power sector stays parked for longer, which keeps pressure on working capital even as the company's underlying generation business continues to run as normal.

What to Watch

The key markers to watch are whether Pakistan can actually close the up to 10 billion dollar refinancing package it is pursuing, any fresh government announcements on clearing power sector arrears, and Hub Power's own disclosures on receivable days and cash collection in its coming quarterly results. Progress on refinancing would ease the pressure on the company; a continued stalemate with Chinese lenders would extend it.