KARACHI: Hub Power (Hubco), the country`s largest independent power producer, said on Wednesday it was seeking an extension to $51 million in bank guarantees to protect its coal-fired power plants, a crucial source of stable power amid Pakistan`s rising use of solar.

The guarantees, previously short-term, would now stay in place until 2034 to cover future loan repayments and potential penalties, the company said in a notice to the country`s stock exchange.

New governmentimposed transmission charges, which Hubco is contesting and says were not included in its original contracts, have pushed investors to seek extended guarantees. The cost of borrowing to provide these guarantees would remain below the expected returns from the projects, it said.

`The extended guarantee will cover any fines or funding gaps that may arise,` Hubco said in a notice to the country`s stock exchange, adding that the company has invested about $131m in the projects so far.

Hubco will hold an extraordinary general meeting in August to seek shareholder approval for the plan for its two 330 megawatt plants operating on locally mined coal `to ensure the plants` continued operation,` it said.

The plants` problems stem from broader challenges faced by the power sector. Pakistan last year authorised an early termination of a power supply deal running to March 2027 as a part of an IMF mandate to cut energy debt.--Reuters