China Development Bank, China Construction Bank, and ICBC provide $621 million USD syndicated loan for the 2 X 330 MW Engro Thar Block II Coal Power Project (Linked to #54316, #54315) (CPEC, IPP)

Engro Powergen Thar Limited (EPTL) was a joint venture company — established by Engro Powergen China Machinery and Engineering Company (CMEC), Habib Bank Limited (HBL), and Liberty Mills Limited — that is responsible for establishing a 2 X 330 (660MW) mine mouth circulating fluidized bed technology coal-based power plant. The independent power plant project (IPP) was located at Thar Block II, 25 kilometers from the city of Islamkot, near the village of Singharo-Bitra in the district of Tharparkar within Sindh Province. Thar Block II was a 95.5 square kilometer area of the Thar coalfield, which has total lignite reserves of 175 billion tons which can be utilized to produce 100,000 MW for over 200 years. The project will be fueled by coal supplied by Sindh Engro Coal Mining Company (SECMC), which was developing a coal mine of 3.8 million tonnes per annum capacity beside the project (see project ID#54315). The total estimated cost of the 2 X 330 MW Engro Thar Block II Coal Power Project was $1.1 billion USD which was financed with 75% debt and 25% equity. Accordingly, the total equity requirement is $275 Million USD. The majority of the equity investment for the project was expected to be from EPTL and its affiliates. IJGlobal reported that China Machinery Engineering Corporation (CMEC) invested $96.95 million USD (see Project #54316). In December 2014, Industrial and Commercial Bank of China's (ICBC) Karachi Branch submitted an initial expression of interest to provide $825 million USD of debt financing for the power project. Then, a set of financing agreements were signed in Beijing on December 21, 2015 for both the power plant aspect (this project) and the mining aspect (see Project #54315). Under these agreements with EPTL, the 2 X 330 MW Engro Thar Block II Coal Power Project project was supported by a Pakistani rupee-denominated syndicated facility agreement from consortium of banks including: HBL, United Bank Limited, Bank Alfalah Limited, Askari Bank Limited, Soneri Bank Limited, Sindh Bank Limited, Bank of Punjab, MCB Bank Limited, Faysal Bank Limited, Pak Oman Investment Company Limited, Industrial and Commercial Bank of China, National Bank of Pakistan and Pak Brunei Investment Company Limited. The total syndicated loan is worth worth 17,016,000,000 Pakistan rupees. Moreover, EPTL signed a bilateral facility agreement with National Bank of Pakistan worth 3,134,000,000 Pakstani rupees as well as Islamic facility agreements with three banks — Meezan Bank Limited, Faysal Bank Limited and Habib Bank Limited — worth 4,000,000,000 Pakistani rupees. All of these loans were repayable in 20 semi-annual installments commencing from the earlier of (i) first fixed date falling after 48 months since facility effective date and (ii) second fixed date falling after Commercial Operations Date (COD); where fixed dates are defined as first June or first December of any year and carries interest at the rate of 3 months KIBOR plus 3.5%. On December 21, 2015, EPTL also signed a $621 million USD syndicated loan facility agreement with China Development Bank (CDB), China Construction Bank (CCB) and Industrial and Commercial Bank of China (ICBC). The financial breakdown is unknown. The terms of the syndicated loan facility are as follows: 14-year maturity period, 4-year grace period, and a 4.685% interest rate (6 month LIBOR plus a 4.2% margin) (see 'Engro Corp Annual Report 2018', p. 182-183). Sinosure provided insurance for this loan. The Government of Pakistan also provided a sovereign guarantee. As of December 31, 2018, EPTL drew down $504,731 against this facility. China Machinery Engineering Corporation (CMEC) was the EPC contractor responsible for project implementation. The project reached its commercial operation date (COD) on July 10, 2019.

Additional details

IJGlobal (see source ID 61620) assumes that the financial breakdown between the banks is equal such that CDB, CCB, and ICBC each contributed $207 million USD to the syndicated loan. The interest rate is calculated as follows: 0.485% (6 month USD LIBOR rate in 2015) + 4.2% (given margin) = 4.685%

Number of official sources

12

Number of unofficial sources

16