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October 8, 2015

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Hubco, Chinese firm to set up Special Purpose Vehicle

KARACHI: Hub Power Company (Hubco) and China Power International Holdings (CPIH) are jointly setting up a Special Purpose Vehicle (SPV) for developing 2x660MW coal-fired power plants along with a dedicated import jetty at Hub, Balochistan.
The total cost of the project is $1.8 billion. The SPV is being set up next to its thermal power station and Hubco plans to gradually enhance coal-based generation to 3,600MW.
The total equity is $450 million, of which CPIH’s share is $230 million (51 percent) and Hubco’s share is $220 million (49 percent). The total debt is $1.35 billion, which will be raised through Chinese Lending Consortium.
Meanwhile, Hubco has approached the National Electric Power Regulatory Authority (Nepra), seeking licence for the generation plants and jetty.
According to details available with The News, coal used for 2x660MW coal-fired power plants will be supplied from South Africa or Indonesia. The total coal requirement is 4.185 million tons per annum.
The company and its partners conducted due diligence studies to assess options of getting coal on the ground at Hub site for the plant.
Existing ports (KPT and Port Qasim) were visited and studied to gauge their operation and handling of an additional four million tons of coal for the plant. Trucking option was studied in order to bring coal from the ports to Hub site. Railway network was considered as another option.
In addition to the existing infrastructure, multiple options of having a new jetty terminal at Hub site were also considered, for which a separate feasibility study was undertaken. Having a standalone jetty terminal for the project to import coal turned out to be the best solution. This is because the existing road network cannot support the requirement and rail lines are not laid to reach Hub site.
Therefore, Mother Vessel Jetty protected with a breakwater has been finalised as the most optimised solution.
It was learnt that Trafigura would be

the coal supplier. Hubco and CPIH have developed the project schedule, which is also in line with the upfront tariff requirements. In order to further streamline the activities and aim to bring the first unit online before the end of 2018, a target of 36 months and 42 months from the financial close has been selected for the EPC for Units 1 and 2, respectively. Hubco and CPIH had already discussed having continued cooperation towards setting up additional units at the same site (after the current project is successfully implemented) up to 6x660MW power plants based on coal.

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