Islamabad, December 21, 2015 (PPI-OT): Another important milestone is achieved for both the mining and associated power plant project for Thar Coal Block II as Sindh Engro Coal Mining Company (SECMC) and Engro Powergen Thar Limited (EPTL) signed local and foreign financing agreements today in Beijing, China. Negotiations to secure the loan financing for the Thar Coal Project in Thar Coal Block II have been ongoing since term sheets for the same were signed during Chinese President Mr. Xi Jinping’s visit to Pakistan earlier this year.
Under the Finance Agreements signed, a syndicate of local banks including conventional and Islamic financing institutes will be providing PKR 52 billion for the mining Project being undertaken by Sindh Engro Coal Mining Company and PKR 22 billion for associate power plant being established by Engro Powergen Thar Limited. The syndicate is led by Habib Bank Limited (HBL), United Bank Limited (UBL), Bank Alfalah Limited (BAFL), and Faysal Bank Limited (FBL). The Foreign syndicate consists of Chinese Banks namely, China Development Bank (CDB), Construction Bank of China (CBC) and Industrial and Commercial Bank of China (ICBC) are providing loans amounting to USD 820 million.
The drafts of the aforementioned agreements were approved by the Ministry of Finance earlier this year and the Government of Pakistan has provided Sovereign Guarantee of USD 700 million to underwrite the loan taken by SECMC fully backed by Government of Sindh (GoS). 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.
In addition, Sponsor Support Agreements for both projects were also signed, whereby the Sponsors, namely, Government of Sindh, Engro Powergen Limited, Thal Limited, Hub Power Company, Habib Bank Limited, and China Machinery Engineering Corporation agreed to inject USD 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 phase 2 of the Project, the mine will be expanded to a capacity of 7.6 mtpa and another 660 MW power plant facility will be added, this expansion has also been included into the CPEC.
Earlier this month, the GoS 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 mounting to USD 600 million (PKR 60 billion).
This marks the start of an era which will usher energy security and economic prosperity for Pakistan as both mining and power projects move closer to financial close, which is expected by the end of this year.
The Project will prove to be a game changer, providing a sustainable energy landscape for Pakistan by utilizing its indigenous energy resources at the same time bringing prosperity to the local people of Thar.
For more information, contact:
Sindh Engro Coal Mining Company (SECMC)
8th Floor, Harbor Front Building,
Marine Drive, Block 4, Clifton,