ISLAMABAD: China Power Hub Generation Company Pvt Ltd (CPHGC) — the sponsor of proposed 1,320MW coal power project — on Monday said it had finalised $1.5 billion financing arrangements with a consortium of Chinese banks led by China Development Bank (CDB) and Exim Bank of China.
With this, the company said it was getter closer to have a financial close for the project by end of 2017, according to a company statement which said the financing documents including the main foreign loan facility agreement were signed last week in Chengdu, China.
The consortium of banks will provide up to 75 per cent of total project investment that works out at approximately $1.5bn. It said the China Power International Holding Ltd (CPIH) had until now provided $300 million as shareholder loan to pay for project construction.
The documents were signed by representatives (CPIH), Hub Power Company (Hubco), CPHGC, CDB and Exim Bank of China as well as the other participating banks of the consortium including Industrial and Commercial Bank of China, China Construction Bank and Bank of Communications.
The project of CPHGC is located at Hub, Balochistan, 45 kilometre northwest of Karachi. The equity proportion of CPIH in CPHGC is 74pc and that of Hubco is 26pc. The total investment in the two (660MW each) projects based on imported coal along with a dedicated jetty is approximately $2bn. During commercial operations, the project is expected to provide 9 billion kWh electricity to the national grid every year – enough for about 4 million households.
China Development Bank is the largest foreign investment and financing cooperative bank in China as well as the largest development financial institution in the world with an estimated gross asset nearing $2.4 trillion, the statement said.
Until now, the bank has supported 19 projects in Pakistan with a combined worth of around $7.8bn, covering a number of key areas of cooperation between China and Pakistan.
Since 2006, CDB has established a good cooperative relationship with Pakistani government, local banks and Pakistan-based Chinese enterprises, giving a credit of $1.7bn to the Ministry of Finance and $500m to Habib Bank Ltd.
Yu Bing, Chairman of China Power International Holding, said the CPIH was committed to the One Belt One Road initiative, and was actively participating in the construction of China-Pakistan Economic Corridor. CPHGC project is recognised as one of the “Priority Projects” under CPEC and it is highly valued by the governments of both sides.
He said the project will help ease Pakistan’s electricity shortage and bring considerable tax income and employment opportunities and improve the local people’s livelihood.
A wholly-owned subsidiary of State Power Investment Corporation (SPIC), one of the Fortune 500 companies, CPIH mainly engages in the development, construction, operation, overseas investment and financing and capital operation of power generation projects.
The company’s has assets in 23 provinces of China as well as in Hong Kong and Macao. Overseas it has investments in Pakistan, Vietnam and Germany among other countries. By end of 2016, the CPIH’s total installed capacity stood at 28,110MW and its total assets reached $18.45 billion.
Hub Power is the largest Independent Power Producer (IPP) in Pakistan with a combined power generation capacity of over 1,600MW. The company’s RFO-fired thermal Plant, situated at Mouza Kund, Hub Balochistan, supplies net 1,200MW of reliable and uninterrupted electricity to the national grid.
Published in Dawn, October 31st, 2017