Hubco, CPIH ink $2.4bln coal-fired power project deal

KARACHI: Hub Power Company (Hubco) signed a joint venture agreement with China Power International Holding Limited (CPIH), a wholly-owned core enterprise of China Power Investment Corporation (CPIC), to develop a $2.4 billion coal-fired power project, a statement said on Monday.
Hubco and the CPIH will develop an imported coal-fired power plant, based on the upfront tariff announced by the government of Pakistan, along with an ancillary coal jetty at the company’s existing site at Hub, Balochistan. The cost of the project is approximately $2.4 billion, with debt to equity ratio of 80:20.
The JVA was signed amid the presence of honourable Prime Minister of Pakistan Nawaz Sharif, honourable President of People’s Republic of China Xi Jinping and the senior management of Hubco and CPIH.
This project would contribute towards alleviating the current energy crisis prevalent in Pakistan.
Feasibility study, along with the field investigation and geo-technical investigation for plant and the jetty has been carried out. This is the first time field investigation and geo-technical Investigation have been carried out for the Hub area. Environmental and Social Impact Assessment (ESIA) for the plant and the jetty is also being conducted.
The Hub site has many Brownfield advantages – secured and fenced land, existing infrastructure (roads, colony etc), access to Arabian Sea for direct import of coal, existing helipad, etc – making it an ideal location for power plant development. The coal-based Brownfield project at Hub is being developed on a fast-track basis.
Hubco is the country’s first and the largest Independent Power Producer (IPP) and stands as one of the most efficient thermal power plants in the country. Hubco is also the first IPP to go into expansion and has set up the country’s first hydel IPP. With the combined power generation capacity of over 1,600MW, the company and its subsidiary provide approximately 10 percent of the country’s electricity demand.
The coal-based plant will be established with state-of-the-art technology to stringently follow standards set by National Environmental Quality Standards.
A Memorandum of Understanding (MoU) was signed with CPIH in Beijing in November 2014, amid the presence of the prime ministers of Pakistan and China. The principal business of CPIH is to develop, construct, own, operate and manage large power plants. Currently, the company is managing state-of-the-art power plants with a generation capacity of more than 25,000MW, while its parent company CPIC manages over 100,000MW power plants.
Hubco and CPIH have also applied for Letter of Intent (LoI) to setup the coal-based power project. Financial and tax advisor for financing of the coal project has also been appointed by both the parties.
CPIH President Yu Bing said, “Hubco and CPIH share mutual trust and recognise each other’s capabilities, which is the pre-condition for a successful long term relationship. We are aware of the strategic advantages of Hubco’s coast-based power plant site, and therefore, are developing the power plant at the existing site.”
Hussain Dawood said, “Hubco has a strong growth pipeline. The company is all set to seek medium to long-term growth through expansion and investments. This collaboration will not only strengthen Hubco’s leadership position in industry, but will also serve as an important milestone in attaining the sustainability in our energy mix.”
Hub Power Company CEO Khalid Mansoor said, “We see this power project as an opportunity to deliver long term socio-economic benefits for the country and its residents. Our coal project will pave the way for a much-needed shift of Pakistan’s current energy mix to the most sustainable and affordable alternate energy resource. The project will also set precedence for further investment in the energy sector.”