The Private Power and Infrastructure Board (PPIB), which had successful inducted of 25 independent power producers (IPPs) with a joint capacity around 6,500 MW costing around $7.0 billion, has achieved the financial closing of its largest gas based IPP. The PPIB has declared the achievement of Financial Closing for 404 MW Gross (ISO) combined Cycle Gas Turbine, Uch-II Power Project near Dera Murad Jamali, District Nasirabad, Balochistan based on indigenous low Btu Gas from Uch Gas field, said a press release.
Upon financial closing, the PPIB also issued a sovereign guarantee on behalf of the Government of Pakistan in favour of the project company to secure the payment obligations of power purchaser. The project is expected to be commissioned by December 2013. The OGDCL will supply gas to the project from Uch Gas field under a long term gas supply agreement. The electricity generated from the project will be sold to NTDC under a 25 year Power Purchase Agreement.
The project will attract foreign investment of around $500 million to the country. The Project is being financed through debt equity ratio of 75:25 percent. International Power UK which is a blue chip international investor with vast experience of developing power projects around the world is main sponsor of the project. The sponsors are investing $124 million through debt financing of $371 Million to the Project is provided by foreign lenders including the Asian Development Bank (ADB), International Finance Cooperation (IFC), Islamic Development Bank (IDB) and Export-Import Bank of Korea (KEXIM).
The move which requires an investment of around US$ 500 million represents the confidence of international investors and lenders in the economy and power sector of Pakistan. In view of prevailing power shortage and increasing dependence on imported fuel oil, the Uch-II Power Project based on indigenous low Btu gas is very important from an energy security and economic perspective. The project will not only help in curtailing the present power shortages but also provide cheap electricity to the consumers and save precious foreign exchange in oil imports.
In addition, the project will also bring revenue generation for OGDCL as the low Btu gas cannot be injected to national gas pipeline system and could not be used productively for any purpose other than power generation. The planned facility will be located in an underdeveloped area of Balochistan and will hopefully work as a catalyst for the socioeconomic uplift of the area, generating both economic activity and create employment opportunities for locals.
It also entails improvement of the basic infrastructure in the vicinity and will be helpful in the poverty alleviation of the people of the remote area. The implementation of Project shows the seriousness of the government to develop Balochistan and tackle the scourge of the energy crisis.