Engro to raise $1.438bn for coal mining, power plants

KARACHI: Sindh Engro Coal Mining Company (SECMC) is in the process of completing the financing to allow it to build coal mining and power plant projects in Thar, a top official of the company said.
The joint venture between Engro Powergen and Sindh government – SECMC – is raising $1.438 billion debt from local and Chinese banks, the official said.
Of total, $613 million is for mining coal at Thar Block-II, while $825 million debt will be used to set up two 330 megawatts of coal-combusted power plants.
The cost of mining project with a production capacity of 3.8 million tonnes/year is estimated at $875 million.
“The equity component of the mining project ($263 million) is already complete with a majority shareholding of government of Sindh,” said the official. “The remaining equity will be taken up by Engro and affiliates, including Thal Limited – a company of House of Habib – Hub Power Company, Habib Bank and Chinese investors. The company has received an equity injection of $35 million from a group of investors so far.”
The debt financing for coal mining project will be raised against sovereign guarantee but majority of the financing, which is $400 million, will be made by local banks, he added. “Balance amount will be financed by a Chinese bank.”
The official said SECMC wants to achieve the financial close of the coal mining project soon—maybe by next quarter of this year.
About coal power project with an equity requirement of $275 million, he said it will be developed and expected to be complete by first quarter of 2018.
“We have signed option agreements with HUBCO and House of Habib (Thal Ltd) for two additional 330MW units at Thar, which are expected to be completed by 2019-end,” he said.
Thar Block-II mine will be expanded in phases to reach its ultimate potential of 22 million tonnes/year, which will fuel the 3,960MW mine-mouth energy park, the official said. “In subsequent phases, mine will be scaled up to its optimal potential of 22 million tonnes/year and additional four power plants of 660 megawatts will be set up within 10 years.”