Hubco, Fauji Fertilizer to set up 330MW coal power project

KARACHI: Fauji Fertilizer Company Limited (FFC) and Hub Power Company Limited (Hubco) signed an agreement to set up a 330-megawatt local coal-based power project in Thar, a statement said on Thursday.

Hubco, FFC and China Machinery Engineering Corporation, which is a state-owned enterprise of China, signed the shareholders agreement at an event in Islamabad, the statement added.

The power plant will be part of China Pakistan Economic Corridor project and will be built under a special purpose company Thar Energy Limited.

The project will be based on local coal to be mined from the coal fields of Thar Block-II in which Hubco has eight percent equity stake.

The project’s financial close is expected in June 2018, whereas the ground work on the site has already commenced and the project is expected to begin commercial production by December 2020.

Saleemullah Memon, chief executive officer of Thar Energy Limited said the project, with strong backing from professional sponsors, would be completed within the allocated time.

Shafqaat Ahmed, managing director of FFC said Hubco holds 60 percent stake in Thar Energy Limited, while Fauji Fertilizer has 30 percent shareholding and China Machinery Engineering Corporation has 10 percent stake in the project.

Ahmed said the project will help address the power shortfall in the country while utilising local coal, which is also a major objective of the present government, besides adding value to the company’s long-term investments in the best interest of its shareholders.

Khalid Mansoor, chief executive officer of Hubco said Thar coal mine will be a game changer for Pakistan as it will indigenise the country’s energy source.

“The project would be amongst the first of the series of power plants based on Thar coal and would bring about substantial savings in foreign exchange of the country,” the statement quoted Mansoor as saying. “This strategic partnership will open up new avenues of business growth, whereas the excellent financial position, credibility and best business practices of the two corporate will provide synergy and confidence for all the stakeholders.”

Sindh Engro Coal Mining Company set up the country’s first power plants with 660MW production capacity to be run on from coal in Thar that is estimated to hold 175 billion tons of coal reserves. The two billion dollar project is expected to start operation from December. Additionally, the country is seeing development of a number of coal-combusted power plants, which would use imported coal as inputs.

Major one is under development by China Power Hub Generation Company with 1,320MW capacity and that has already achieved financial close.