ICBC pledges a $55 million loan for 52.8MW Sapphire Wind Power Project

Sapphire Wind Power Company Ltd. (SWPCL) — a project company (special purpose vehicle) — was established to finance, design, implement and maintain a wind power project in the town of Jhampir within Thatta district and Sindh province in Pakistan. The sole sponsor/shareholder of SWPCL is Sapphire Textile Mills Limited. The 52.8MW Sapphire Wind Power Project was originally going to be implemented as an independent power project (IPP) on the basis of a 75:25 debt-to-equity ratio, with $96.66 million of debt coming from Chinese and non-Chinese banks and Sapphire Textile Mills Limited injecting $32.22 million of equity. In a 2011 tariff petition to Pakistan’s NEPA, SWPCL indicated that it would receive $55 million of debt from the Industrial and Commercial Bank of China (ICBC), $30 million of debt from ECO Trade and Development Bank (ETDB), and $11.66 million from local banks in Pakistan. The reported terms of the ICBC loan pledge were as follows: 12-year maturity. 2-year grace period, interest rate of 6-month LIBOR (Year average: 0.507%) plus 400 basis points, a 1.5% arrangement fee, and a 0.8% commitment fee. Sinosure also agreed to provide insurance for the ICBC loan. China Machinery Engineering Corporation (CMEC) was identified as the EPC contractor and GE Energy ("GE") as the turbine supplier for the project. However, the project was ultimately financed by the U.S. Government’s Overseas Private Investment Corporation (OPIC) and it reached its commercial operations date (COD) in November 2015.

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

6

Number of total sources

7