Wapda plans $500 million green eurobonds in tranches by March 2020

LAHORE: Water and Power development Authority (Wapda) aims to issue up to $500 million of long-term dollar-denominated green bonds by March 2020 to fund its long-stalled mega-projects, officials said.

The state-run utility has planned four to five tranches of the bond and it will tap the international environmentally-minded investors with $100 million worth of issue each year for the next five year period, they added.

“A deal with the consortium of investors would be finalised by the end of this year, and the first Green Eurobond of $100 million would be offered to the investors by March 2020,” a source said.

Hydro projects Mohmand Dam and Diamer Bhasha Dam will be funded by the green bonds.

“The funding needs of Mohmand and Bhasha are spread over several years; therefore, the Green Eurobonds would be offered in lots of $100 million over the next four to five years,” the source said.

A Wapda delegation headed by its chairman Muzzamil Hussain visited Dubai and London last week to pitch these projects in the international financial and capital markets. “During their visit, the delegation met a number of globally renowned institutions,” another source said.

“Most of these investors had prior exposure to Pakistan’s bond market. They showed interest in Wapda’s Green Eurobond transactions.”

The source said the interested investors included banks, hedge funds, and insurers.

Officials said sentiments show that $500 million could be collected in one go, but since the funds would not be utilised it would be prudent to launch the

bonds when money for the projects was needed.

Wapda in recent years has successfully generated funds for its development projects from the financial and capital markets. The Neelum-Jhelum and Tarbela 4 projects were completed from the funding arranged through local banks.

Since both projects were now operative and generating income for the utility, the servicing of the loans was not a problem for the authority. It was the first time that WAPDA got mega loans on the strength of its huge asset-base, officials said.

Encouraged by the success in arranging loans from the domestic market, WAPDA authorities decided to approach the international finance and capital markets taking advantage of strong liquidity for green issues.

Officials said the international investors recognise the fact that Pakistan has not been able to exploit its hydropower generation potential because of paucity of funds and also because the gestation period of hydro projects is very long.

“They also recognise that Wapda has somehow installed over 7,500MW hydro-electric capacity that generates a lot of funds for the authority,” an official said.

“They feel that new projects could be funded against the mortgage of existing projects when the repayments have sovereign guarantees.”