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

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 (captured by linked project 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 USD 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 period 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, China Construction Bank, and China Development Bank that carries a maturity period 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. AidData estimates all three Chinese-owned banks contributed equally ($66,666,666.67 each) to the syndicated loan facility (captured in Project ID#54315, #98767, #98768). Project ID#54315 records the debt financing component. The equity financing component is captured via Project ID#53968. China Machinery Engineering Corporation and China-East Resources Import & Export Company are the EPC contractors responsible for project implementation. Project implementation began on April 13, 2016. In September 2017, it was reported project was 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. In December 2017, it was reported that half of the work on That Coal Block-II was completed and that the project was to be completed and functioning by August 2019 and have 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.

Additional details

1. The Sinosure insurance premium is identified via https://www.dropbox.com/s/bmx3w2b38o7guxm/Debt%20Pricing%20of%20IPPs%20%28002%29.pdf?dl=0 2. The exact size of CDB, CCB, and ICBC’s respective financial contributions to the $200 million USD syndicated bridge loan are unknown. For the time being, AidData assumes that all 3 members of the lending syndicate contributed equal amounts ($66,666,666.67).

Number of official sources

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Number of total sources

6