[IPP] China Eximbank pledges loan for Rakh Chaubara 100 MW Solar Power Project

On July 7, 2017, China Eximbank submitted a letter of intent (LOI) to provide a USD 63,760,000 loan for the Rakh Chaubara 100 MW Solar Power Project. The borrower would be Zhenfa Pakistan New Energy Company (Pvt.) Limited (ZPNECL), a special purpose vehicle (or project company) and subsidiary of Chinese company Zhenfa Energy Group Co. Ltd. The LOI estimated that the borrowing terms would include a 15-year maturity and 4.975% interest rate (6-month LIBOR plus 3.5% margin). It is unclear whether China Eximbank ever formally committed these funds. The purpose of this project was to construct a 100 MW solar power plant in Rakh Chaubara within Layyah District, Punjab Province, Pakistan. This USD 91,088,000 project would be financed with a debt:equity ration of 70:30. China Eximbank's loan would cover the entire debt component and ZPNECL would cover the equity portion. It is unclear whether works ever began.

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

4

Number of total sources

4