[IPP] ICBC provides PKR 727,352,000 loan for Sachal 49.5 MW Wind Power Project (Linked to Project ID #52660)

On February 15, 2015, the Industrial and Commercial Bank of China (ICBC) and Sachal Energy Development Pvt Ltd (SEDL) entered into two different loan agreements for the Sachal 49.5MW Wind Power Project in Jhimpir, Pakistan. The first was a $100 million USD-denominated loan facility agreement (see Project ID #52660) with a 12 year maturity, 2 year grace period and an interest rate of 6 month LIBOR (1.4154%) plus a 3.75% margin. Sinosure provided insurance for this USD-denominated component. The second loan was a PKR-denominated facility worth PKR 727,352,000 (captured in this project) with a 12 year maturity, 2 year grace period, and an interest rate of 6 month LIBOR (1.4154%) plus a 3% margin. The total cost of this independent power project (IPP) was $130.481 million and it was reportedly financed according to a debt-to-equity ratio of 80:20. Sachal Energy Development (Ptd) Limited (SEDL) is a project company (special purpose vehicle) is 100% owned by Arif Habib Corporation Limited and it was established to finance, design, implement, and maintain the Sachal 49.5MW Wind Power Project. The purpose of this project is to utilize wind resources for electricity generation through the construction of a wind farm with a total capacity of 49.5 MW and to deliver the electricity generated from the project to the power purchaser, i.e. National Transmission & Dispatch Company Limited (NTDC). The project involved the installation of 33 Wind Turbine Generators (WTGs) from Goldwind. Each WTG had a capacity of 1.5 MW. Hydrochina Corporation was the offshore EPC contractor and Hydrochina International Engineering Company Ltd Pakistan was the onshore EPC contractor for the project. Sachal Energy Development Pvt Ltd signed a power purchase agreement with National Electric Power Regulatory Authority in February 27, 2014, and the National Transmission and Despatch Company (NTDC) agreed to purchase electricity at a tariff of USD 0.14861/kWh. The project's inauguration ceremony was held on April 20, 2015. Construction began on December 11, 2015. All WTGs were installed by December 20, 2016. The purchaser and seller Interconnection facilities were energized on March 6, 2017. The project ultimately achieved its commercial operation date (COD) on April 10, 2017. Compared with the Dawood Wind Power Project, also a Chinese-financed 49.5 MW wind farm with a purchase tariff of USD 0.1187/kWh, the electricity from the Sachal Wind Farm is more expensive. It is expected that the project will provide power supply to the national grid of 136,500 MWh per annum. This wind power generation project site was developed on 275 hectares of land and it is located on Jhimpir within Thatta District and Sindh Province.

Additional details

1. The Chinese project title is 巴基斯坦萨察尔50MW风电项⽬. 2. A 2013 tariff petition determination document released by National Electric Power Regulatory Authority (NEPRA) states that the debt financing costs of the project were to be shared between China CITIC Bank (80% of debt) and Askari Bank Limited (20% of debt). However, the tariff petition was ultimately rejected, which suggests that ICBC may have become the sole foreign financier to the project. 3. 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

13