Hubco’s Thar Energy reaches financial close on $$497 million coal-fired power project

ISLAMABAD: Thar Energy Limited (TEL), a subsidiary of Hub Power Company Limited (Hubco), on Thursday reached financial close for a $497 million coal-based 330 megawatts power generation project, a government statement said.

The project is being jointly sponsored by HUB Power Company Limited, Fauji Fertilizer Limited and China Machinery and Engineering Corporation under the China-Pakistan Economic Corridor (CPEC) framework. China Development Bank and Habib Bank Limited are the lead lenders in the project.

The financial closing documents for mine mouth lignite coal power project at Thar Block-II were signed by Shah Jahan Mirza, managing director Pakistan Power Infrastructure Board and Saleemullah Memon, chief executive officer of Thar Energy Limited (TEL).

Omar Ayub Khan, minister for power, with other senior officials of energy ministry witnessed the signing ceremony.

The minister said addition of 330 MW will further energize the national grid and contribute in achieving sustainability and reliability in the power sector.

“In the quest of harnessing indigenous and renewable potential, every single megawatt is crucial for redefining Pakistan’s energy landscape and securing its energy future on an indigenous, native footing which will eventually relinquish Pakistan’s dependence on imported fuels,” the minister added.

The project will utilise Thar coal supplied by Sindh Engro Coal Mining Company (SECMC) from its second phase mine and after implementation of this project overall coal price would be reduced from to $44/ton from $64/ton, which shall significantly reduce the power tariff by cents 1.6/KWh (Rs 2/KWh).

Khalid Mansoor, Hubco chief executive officer said Thar Energy Limited would be a game changer for Pakistan, as it would indigenise the energy source for the country. “The project being setup by TEL 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.”

After commercial operation of this project, around Rs18 billion/year would be saved on account of foreign exchange while Rs260 billion per year would be saved by year 2022 when all Thar coal based projects of 5,000 MW would be operational. As a result, electricity tariff would be reduced to around Cents 5/KWhr.

TEL CEO Memon said the company has engaged China Development Bank as the lead arranger for the foreign financing from China, and Habib Bank Limited as the lead arranger for the local financing. “With strong and professional sponsors, we hope the project would be completed within the allocated cost and time.”

The government statement said sponsors are very keen to complete the project by March 2021 and they have already started construction activities ahead of financial closing. 40 percent work has already been completed.

PPIB is currently handling 17 hydropower projects of 6,550 MW in the private sector which are at different stages of implementation. By 2022, PPIB is targeting to fetch more than 6,500 MW through completion of eleven projects majority are based on Thar coal and hydro.