April 28, 2002	Sunday	Safar 14, 1423

KARACHI, April 27: Three major banks — HBL, UBL and NBP—will arrange Rs12.5 billion for Rs29 billion White Oil Pipeline Project of PAPCO. Around Rs10 billion would be floated as TFCs (term finance certificates) and the remaining amount would be in the form of redeemable preference shares.

The financing arrangement also includes bridge financing of Rs5 billion by the consortium banks to be made available for the project.

In this regard, a meeting of the chief executives of NBP, HBL, UBL and Pak Arab Pipeline Company (PAPCO) was held at the NBP office and memorandum of understanding (MoU) was also signed.

The Rs29 billion ($480 million) white oil pipeline project is achieving financial close and the entire debt financing of $360 million including Rs12.5 billion in local currency is being arranged whereas equity financing of $120 million is in place.

For this project NBP will also provide a foreign currency loan of $18 million and issue a bank guarantee of $102 million for China Exim Bank related to suppliers’ credit from China Petroleum Engineering and Construction Company (CPECC) which have been selected as EPC contractor for the project.

The 817 km-long and 26 inch diameter pipeline has an initial capacity of transporting eight million tons refined petroleum products from Karachi to Mehmoodkot near Multan.

APP ADDS: “This is truly significant and strategic infrastructure project for the country,” said Syed Ali Raza, President of NBP in his remarks.

He appreciated the top management of PARCO and PAPCO for reposing full confidence in the ability of the local banks to arrange such mega financing which will also help develop corporate debt market.

The pipeline project with a capacity up to 12 million tons per annum, will become operational by end of next year. The PARCO has equity holding of 51 per cent in the pipeline management. Major oil marketing companies, Shell, Caltex, and PSO, are other stake holders of the project.

Speaking on the occasion, managing director PARCO Dr Shahid K Haq said the pipeline will transport 25,000 tons of crude oil per day replacing 10,000 trucks and railway wagons.

He said that it will also save a tariff of Rs6 to 7 billion besides reducing pollution.