According to a report published on 22nd December in Pakistan’s Dawn newspaper, a group consisting of two syndicates of banks from China and Pakistan signed a formal financing agreement with the Sindh Engro Coal Mining Company Ltd. (SECMC) and Engro Powergen Thar Ltd. (EPTL) for the Thar Block II Coal and Electricity Integration Project this Monday at Beijing. This project is a priority implementation project for the China Pakistan Economic Corridor (CPEC) and includes the design and construction of an open pit coal mine with an annual production capacity of 3.8 million tons and two pit-head electric stations with a power generation capacity of 330,000 kW. The total investment is to the tune of 1.5 billion US dollars. While the design and construction of the first phase of this project is expected to be completed by 2018, the second phase is being planned and designed to increase the production capacity of the coal mine to 7.6 million tons and the power generation capacity of the electric stations to 1.32 million kW. The Chinese financial consortium includes the China National Development Bank (CDB), Construction Bank of China (CBC), the Industrial and Commercial Bank of China (ICBC), etc. who are providing loans of upto 820 million US dollars with a financing rate of London Interbank Offered Rate (LIBOR) plus 3.3 percentage points. The Pakistani financial consortium includes local banks led by Habib Bank Ltd and comprising of United Bank Limited (UBL), Bank Alfalah Ltd and Faysal Bank Ltd, etc. who are providing loans of 520 million US dollars for the mining project and 220 million US dollars for the pit head electric stations with a financing rate of Karachi Interbank Offered Rate plus 1.7 percentage points.
Before this, these financial agreements were approved by the Economic Coordination Committee (ECC) and the Federal Government of Pakistan has agreed to provide a sovereign guarantee worth 700 million US dollars. At the same time, investors like China Mechanical Equipment Engineering Co Ltd, the provincial government of Sindh, Engro Powergen Thar Ltd etc. will jointly make a capital injection to the tune of 490 million US dollars into the project. The Sindh provincial government has already signed the project execution agreement and the water supply agreement for this project as of December 2015.
Besides the above points and apart from the policies and rules introduced for supporting this project, the Pakistani side will further lay electric transmission and distribution lines from Thar to Lahore. This will ensure that the power project begins commercial operations by the end of 2017 and supplies power directly to the grid with an estimated power cost of 9.5 US cents.
(Source: Website of the Ministry of Commerce)