January 9, 2003	Thursday	Ziqa’ad 5, 1423

KARACHI, Jan 8: Hubco has managed to persuade a consortium of its local lenders led by National Bank to reduce the markup on a Rs2 billion existing loan. The members of the lenders consortium include HBL, UBL, MCB, ABL, PICIC, IDBP and others.

NBP President Syed Ali Raza and Chief Executive of Hubco Vince Harris signed an agreement in this regard at the NBP head office here on Wednesday. Both said while talking to newsmen after the signing ceremony that the lowering of the markup would result in Rs200 million plus saving for Hubco which the company would pass on to WAPDA to which it sells electricity. And WAPDA in turn may pass it on to the consumers in the shape of lower power tariff.

But the sad part of the story is that Rs200 million virtually translates into nothing. Because WAPDA is going to make this saving in four years—between 2002-2005 that is Rs50 million or so per year whereas it has to pay Rs115 billion to independent power producers including Hubco in just this fiscal year. General Manager of WAPDA Power Privatization Organisation Eng. Muhammad Akbar who was present on the occasion admitted this while talking to Dawn.

He said the markup on the banking consortium led by NBP had cut the markup on Rs2 billion Hubco loan from 22 to 15 per cent adding that the cut has been given retrospective effect from January 2002.

Ali Raza said the loan that was first arranged in 1994 by NDFC would run through 2005 adding that NBP became the lead manager of the loan after taking over NDFC. He said lowering of markup on the Hubco loan showed that banks are now willing to accommodate their clients through all possible measures and are no more in habit of dilly delaying critical issues.

He said with the rupee having been stable and prospects set to keep it stable in near future IPPs should explore the possibility of converting their foreign currency loans into rupee loans.

Upon this Eng. Akbar informed the audience that WAPDA and IPPs are already exploring this possibility and a two-member committee been set up including representatives of both sides. A senior NBP executive told Dawn NBP would also like to be represented on this committee and Akbar said this would be done.

Vince Harris appreciated “very professional handling” of the loan agreement by both banks consortium and hoped that Hubco is going to enjoy a very exciting future in Pakistan. Which in turn may send right signals to the international investors and help the country attract more of foreign direct investment. He also appreciated the lowering of the markup on Hubco loan amidst an environment of falling interest rates around the world. He said the signing of the agreement demonstrates the spirit of partnership that partnership that exists between WAPDA and Hubco.