KARACHI: Fauji Fertiliser Company Limited (FFC) has been offered 30 per cent strategic shares in Thar Energy Limited (TEL) by Hub Power Company, its wholly-owned subsidiary.
The independent power producer has offered another 10pc equity interest in the project to the China Machinery Engineering Company (CMEC), the EPC Contractor, for the TEL project, taking its total divestment to 40pc.
Two separate notices released to the PSX on Wednesday by the Hub Power and Fauji Fertiliser said.
TEL is a 330MW local coal-based power plant located in Thar coal block II. The board of FFC has authorised the company to proceed with negotiations for terms and conditions and execution of definitive shareholders agreement.
The total cost of the TEL project is $497.7 million. Since the project is being set up on debt-to-equity ratio of 75:25, the equity portion of the project amounts to $124.4m. The project is envisaged to be completed in 40 months and the expected life of the plant is 30 years.
Analyst Tahir Abbas at Arif Habib Limited forecasts cash flow of FFC to be around Rs3.92bn.
“While TEL has already applied for generation licence, its tariff determination is pending”, says Abdul Samad Khanani, sector analyst at Intermarket Securities. As the FFC has already diversified its interest in Wind Energy and Food, the project fits in the sponsors’ plan of sustainable cash flows, analyst reckoned.
Published in Dawn, March 16th, 2017
