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November 11, 2015

Govt approves draft for SECMC foreign currency loan agreement

Business

 
November 11, 2015

KARACHI: Government of Pakistan has committed to provide sovereign guarantee to Sindh Engro Coal Mining Company for its Thar coal mining project, a statement said on Tuesday.
Based on the commitment, the Finance Ministry has now approved a draft for a foreign currency loan agreement and sovereign guarantee document. The foreign currency loan for the project, which is a part of China-Pakistan Economic Corridor (CPEC), is being provided by a consortium of top Chinese banks led by China Development Bank. Other banks in the Chinese consortium include Industrial and Commercial Bank of China.
Moreover, the Finance Ministry has also given a go-ahead to the terms and conditions of the local currency loan for the project needed for the finalisation of the local currency loan document and associated government guarantee. Sovereign guarantee for the project will be issued by a provision of backup guarantee by the government of Sindh. This now paves the way for the company to achieve financial close within this year.
The associated power plant being established by Engro Powergen Thal Limited (EPTL) is also well on its way to achieve financial close in the same time frame, while the sponsors of the Sindh Engro Coal Mining Company (SECMC) and EPTL have spent approximately Rs 4 billion to kick-start work on the project before the financial close. Physical work is continuing at both sites in earnest and companies hope to achieve grid synchronisation by 2018.
The SECMC is developing a 3.8 mtpa mine and EPTL is developing a 660MW project at Thar. The capital cost of both projects is approximately $2 billion. Earlier, in August this year a landmark agreement was signed to finance Pakistan’s first open-pit coal mine in the natural-resource rich Tharparkar district, which boasts holding 180 billion tons of coal but could not be exploited since it was discovered in the early 1990s.
A consortium of local banks that include HBL, UBL and Bank Alfalah will lend $500

million (Rs50 billion) – one of the largest project financing deals in recent years – to SECMC, a joint venture between Sindh government and five private companies.
Both the companies and its sponsors appreciate the help and support provided to these projects by the federal and provincial governments. Companies are committed to complete the project as early as possible to help eliminate load shedding in the country besides uplifting the lives of the people of Thar.