China Eximbank contributes to $1.416 billion syndicated loan for 870 MW Suki Kinari Hydropower Project (Linked to Project ID#98851, #54309 and #54319) (CPEC, IPP)

On January 9, 2017, the Export-Import Bank of China and the Industrial and Commercial Bank of China (ICBC) signed a syndicated loan agreement worth $1.416 billion to SK Hydro (Private) Limited (SKHPL) -- a special purpose vehicle -- for the 870.25 MW Suki Kinari Hydropower Project. Each lender reportedly contributed $708.1 million. The loan was provided on the following borrowing terms: a maturity of 12 years, a grace period of 5 years, and an interest rate of 6-month LIBOR (0.41326%) plus an 4.75% margin. The borrower purchased a credit insurance policy from Sinosure (at an estimated cost of $95.919 million). SKHPL is a project company (special purpose vehicle) that was established to do finance, design, implement, and maintain the 870.25 MW Suki Kinari Hydropower Project. The shareholders of SKHPL are China Gezhouba Group International Engineering Company Limited, White Crystals Limited (a wholly owned company of Saudi Arabia’s Al Jomaih Group), Malaysia’s Eden Inc., and Pakistan’s Haseeb Khan. This independent power project (IPP) is being implemented on a Build, Own, Operate and Transfer (BOOT) basis and it was financed with a debt-to-equity ratio of 75:25. Equity financing for the project was arranged by the shareholders of Suki Kinari Hydro (Private) Limited. China Gezhouba Group Corporation, Al Jomaih, and Eden each invested $160.09 million USD of equity. The dam, located on River Kunhar in the District Mansehra of Khyber Pakhtunkhwa, was being constructed as a 54.5 meter high and 336 meter wide concrete gravity dam with 2 gated spillways. Four 218 MW turbines were to be installed as part of the project, and were expected to generate approximately 870 MW of electricity in total. Construction of the dam was to result in the formation of a 3.1 kilometer long reservoir with a capacity of 9 million cubic meters of water. It was reportedly not planned to caused large scale displacement of populations as no villages or towns were going to be inundated by the resulting dam's reservoir, although a four kilometer section of the Kaghan-Naran highway was to be diverted as a result of construction works and the resulting reservoir. The EPC contractor responsible for project implementation was China Gezhouba Group Company Ltd. Project construction began on January 1, 2017 and was expected to reach its commercial operation date (COD) and inject 3,081 GWh million of clean reliable and affordable units of electricity each year to the national grid by December 2022. On April 25, 2019, it was reported that 70% of the project had been completed with an expected completion date in 2022. A significant milestone was held when the project held a river closure ceremony on September 28, 2019. The project company will eventually sell all power generated to the Pakistani government —at a cost of 8.8415 US cents per kilowatt hour — under a 30-year power purchase agreement (PPA).

Additional details

1. The Chinese project title is 巴基斯坦苏基克纳里水电项目（870MW). 2. According to multiple, official sources, the Government of Pakistan has issued sovereign guarantees in support of all loans issued by Chinese state-owned banks for independent power projects (IPPs) in Pakistan (see https://www.fmprc.gov.cn/ce/cepk/chn/zbgx/t1735166.htm and http://pk.chineseembassy.org/eng/zbgx/202110/t20211010_9558510.htm and https://www.dropbox.com/s/bmx3w2b38o7guxm/Debt%20Pricing%20of%20IPPs%20%28002%29.pdf?dl=0). As such, AidData assumes that the loan captured in this record is backed by a sovereign guarantee from the Government of Pakistan.

Number of official sources

13

Number of total sources

25