The Sindh Engro Coal Mining Company (SECMC) and Engro Powergen Thar Limited (EPTL) on Monday inked milestone financing agreements with local and foreign financing institutes amounting to $ 1.5 billion, securing all funding necessary for the mining and construction of power plant.
According to details, a syndicate of local banks including conventional and Islamic financing institutes will be providing Rs 52 billion for the Thar coal mining project being undertaken by SECMC and Rs 22 billion for associate power plant being established by EPTL.
The syndicate is led by Habib Bank Limited (HBL), United Bank Limited (UBL), Bank Alfalah Limited (BAFL), and Faysal Bank Limited (FBL). The Chinese syndicate consisting of China Development Bank (CDB), Construction Bank of China (CBC) and Industrial and Commercial Bank of China (ICBC) are providing loans amounting to $ 820 million. The agreements were signed in Beijing, China.
Negotiations to secure the loan financing for the Thar Coal Project have been ongoing since term sheets for the same were signed during Chinese President Xi Jinping’s visit to Pakistan earlier this year. The project’s addition to the China Pak Economic Corridor (CPEC) as ‘priority’ earlier this year paved the way for its financing to be completed in a timely fashion.
The drafts of the agreements were approved by the Ministry of Finance earlier this year. The government of Pakistan has provided sovereign guarantee of $ 700 million to underwrite the loan taken by SECMC fully backed by the provincial government of Sindh.
In addition, Sponsor Support Agreements for both projects were also signed, by the sponsors, the government of Sindh, EPL, Thal Limited, Hub Power Company, Habib Bank Limited, and China Machinery Engineering Corporation agreed to inject $ 490 million into the project to ensure that the companies have the funds available for the smooth execution of the project.
The project is expected to be commissioned by 2018. In the second phase of the project, the mine will be expanded to a capacity of 7.6 million ton per annum and another 660 MW power plant facility will be added, this expansion has also been included into the CPEC.
Earlier this month, the Sindh government signed an Implementation Agreement with SECMC and Water Utilization Agreement with Engro Powergen Thar Limited. Under the Implementation Agreement with SECMC, the government committed to provide the required infrastructure to facilitate the mining project amounting to Rs 60 billion.
