[CPEC, IPP] CDB pledges $750 million USD for the 2 X 350 MW Port Qasim Coal-Fired Power Plant (Linked to Project ID #54321)

Datang Pakistan Karachi Power Generation (Private) Limited (DPKPG) — a special purpose vehicle (SPV) — is responsible for financing, designing and implementing a 2 X 350 MW imported coal based generation facility at Port Qasim Area, Bin Qasim Town, Karachi in the Province of Sindh. The main sponsors of DPKPG include China Datang Overseas Investment Company Limited (CDOIC) (51%), China Machinery Engineering Corporation (CMEC) (25%), and K-Electric Limited (24%). According to a August 2016 Tariff Approval document from National Electric Power Regulatory Authority, the total project cost of this independent power project (IPP) is $1,109,600,000 USD. A Chinese Ministry of Commerce site announcement in September 2016 reported that China Development Bank has agreed to lend $750 million USD for the project, and that local banks were also planning to form a local bank syndicate to contribute to the debt financing of the project. It also reported that the project would be financed according to a debt-equity ratio at 70:30. The NEPRA tariff approval document puts the interest rate at LIBOR (0.45%) plus 450 basis points, with a repayment period of 10 years and grace period equivalent to the construction period (40 months). DPKPG also included a “term sheet” from China Development Bank in its 2016 NEPRA application. However, it is unclear if CDB ultimately approved a loan for this project. DPKPG was granted a generation license on May 23, 2017. Then, in October 2017, the following tender notice for the project was issued: "Datang Pakistan Karachi Power Generation (Pvt) Ltd (DPKPG) is building a new 700 MW coal-fired power plant at Port Qasim, Karachi. This facility will comprise 2 x 350 MW power plant units built on reclaimed land with a dedicated coal unloading jetty for handling 50,000 DWT bulk carriers including all the coal handling equipment and facilities." In April 2019, DPKPG signed a contract with CMEC, under which CMEC would serve as construction contractor for the project. A start date for construction was not given. According to the website of one of the project sponsors (K-Electric), land has been acquired for the project and Commercial Operations Date (COD) is expected in the 4th quarter of FY 2022.

Additional details

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

11

Number of total sources

12