China Machinery Engineering Corporation, with which an engineering, procurement and construction contract has been signed, has started preliminary work on the project site in order to swiftly start commercial production. PHOTO: FILE
KARACHI: Hub Power Company (Hubco), one of the largest independent power producers in Pakistan, has signed an implementation agreement with state-owned Private Power and Infrastructure Board (PPIB) which outlines the debt repayment schedule for its 330-megawatt Thar coal-fired power plant.
Cost of the project is estimated at $505 million which comprises 75% debt and 25% equity. “The project is expected to be commissioned by the end of 2020,” said a statement issued on Wednesday.
Hubco has engaged China Development Bank as the lead arranger of foreign financing from Beijing and Habib Bank as the lead arranger of local financing.
‘Thar coal will power the nation’
The mine-mouth power plant in Thar is among billions of dollars worth of projects being executed under the China-Pakistan Economic Corridor (CPEC) framework. Hubco has established a wholly owned subsidiary called Thar Energy Limited to develop the first indigenous coal-based power plant in Thar coal block-II.
PPIB Managing Director Shah Jahan Mirza and Thar Energy Limited Chief Financial Officer Fatima Maryam inked the implementation agreement.
National Electric Power Regulatory Authority (Nepra), the power sector regulator, has awarded Hubco a levelised tariff of Rs8.2550 per kilowatt-hour (kWh), or 8.5015 US cents). This includes return on equity at the rate of 30.65% (Rs1.4075 per kWh), it is learnt.
China Machinery Engineering Corporation, with which an engineering, procurement and construction contract has been signed, has started preliminary work on the project site in order to swiftly start commercial production. Agreements for power purchase, coal supply and water consumption had been signed earlier.
Hubco has offered 30% shareholding to Fauji Fertilizer Company (FFC) and 10% stake to China Machinery Engineering Corporation in its subsidiary Thar Energy Limited. “The company is in the process of finalising shareholder’s agreement,” the statement said.
Talking to The Express Tribune recently, Hubco Chief Executive Officer Khalid Mansoor said the prime objective of the partnership was to build a strategic alliance instead of attracting equity for the project.
The government aims to develop new power projects based on domestically produced coal rather than on imported fuels in the future. “Hub Power Company and Fauji Fertilizer Company have financial strengths to implement the future plans,” he said.
“The Thar power project is one of the projects to be implemented by two financially sound companies.”
Coal, power and Thar
Hubco currently produces 1,600 megawatts of electricity through its three plants in Hub, Narowal and Azad Kashmir. It is the only power producer in Pakistan with interests in three projects that feature in CPEC.
These are imported coal-based China Power Hub Generation Company (Private) Limited at Hub, Sindh Engro Coal Mining Company which is developing block-II of Thar coal field and Thar Energy Limited.
Published in The Express Tribune, November 16th, 2017.
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