ICBC contributes to $200 million loan for coal mine to support a coal-fired power plant at Thar Block II (Linked to Record ID#53968, #35127, #54316, #98767, #98768, #85178, and #85179)

Project narrative

Sindh Engro Coal Mining Company Limited (SECMC) is a joint venture — between the Government of Sindh (54.7%), Engro Powergen Limited (EPL) (11.9%) and its affiliate Engro Powergen Thar Limited (EPTL) (11.9%), Habib Bank Limited (9.5%), Hub Power Company Ltd (8%), and China Machinery Engineering Corporation (4%) — that is responsible for developing a coal mine of 3.8 million tonnes per annum capacity. This coal mine will supply coal to a 2 X 330 (660 MW) mine mouth circulating fluidized bed technology coal-based power plant (as captured via Record ID#35127, #85178, and #85179), which is located at Thar Block II, 25 kilometer from the city of Islamkot, near the village of Singharo-Bitra Tharparkar District and Sindh Province. The coal will initially be supplied to Engro Powergen Thar (Private) Limited (EPTL), per a Coal Supply Agreement dated June 7, 2015. However, SECMC plans to expand its mining capacity to 7.6 metric tons per annum to cater for the two additional 330 MW power plants run by Thar Energy Limited and ThalNova Power Thar (Pvt.) Limited. Thar Block II is a 95.5 square kilometer (km2) area of the Thar coalfield, which has total lignite reserves of 175 billion tons which can be utilized to produce 100,000 Megawatt (MW) for over 200 years. The project will cost $911 million and it is being financed according to a 75:25 debt to equity ratio. On December 21, 2015, Sindh Engro Coal Mining Company (SECMC) signed three loan facility agreements: a syndicated loan facility agreement with 8 commercial banks (Habib Bank Limited, United Bank Limited, Bank Alfalah Limited, Askari Bank Limited, Sindh Bank Limited, Bank of Punjab, NIB Bank Limited, and Habib Metropolitan Bank) worth 40 million Pakistani rupees with a maturity period of 14 years, a grace period of 4 years, and an interest rate of 6-month KIBOR plus a 1.75% margin; an Islamic syndicated finance agreement with three banks (Meezan Bank Limited, Faysal Bank Limited, and Habib Bank Limited) worth 12 million Pakistani rupees with a maturity of 14 years, a grace period of 4 years, and an interest rate of 6-month KIBOR plus a 1.75% margin; and a $200 million (USD-denominated) syndicated loan facility with the Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), and China Development Bank (CDB) that carries a maturity of 14 years, a grace period of 4 years, an interest rate of 6-month LIBOR (0.485%) plus a 3.3% margin, and a 6.616% Sinosure insurance premium. The Sinosure-backed loan was backed by a sovereign guarantee and collateralized against a pledge of shares in the project company (SECMC) by the equity holders. The debt financing contributions of ICBC, CCB, and CDB are captured via Record ID#54315, #98767, #98768. The equity financing component is captured via Record ID#53968. China Machinery Engineering Corporation and China-East Resources Import & Export Company were the EPC contractors responsible for project implementation. Project implementation commenced on April 13, 2016. In September 2017, the project was reportedly in the process of dewatering three of the aquifers in the mine, with all challenges being addressed in a timely manner. The water drained from the three aquifers would recycled later for the operational work of the Thar Coal Block-II power projects. Then, in December 2017, half of the work on Thar Coal Block-II was reportedly completed and the project was to be completed and functioning by August 2019 (with a capacity of 1.32 gigawatts but divided into four mine-mouth power plants and mining 7.6 million tonnes of coal per year). The project ultimately reached its commercial operation date (COD) on July 10, 2019.