Money will be in hand to start digging the mine by March or April after the Chinese government gave a conceptual approval to the project, said Sindh Engro Coal Mining Company (SECMC) CEO Shamsuddin Ahmed Shaikh.
“They wanted certain assurances on top of a sovereign guarantee from Pakistani government,” he said. “Now that it has been settled, we aim to complete the financial close by the first quarter of next year.”
SECMC was originally a joint venture between the Sindh government and Engro Corporation. But now it also has private companies like Hub Power Company, Habib Bank Limited and Thal Limited as equity partners.
Shaikh said that he was comfortable with the project’s progress, the first one to come near realising the potential of vast coal reserves discovered in Thar Desert in the early 1990s.
“Good thing is that work has already started on our part,” he said, referring to preliminary civil works being carried out at the mine site.
A consortium of local banks has assured arranging $400 million for the project, he added.
“As a matter of fact, the banks now tell us that they are willing to finance the remaining $200 million of the project cost, which was the foreign component,” said Shaikh
Initially, the company aims to spud 3.8 million tons of coal annually.
The project also involves a 660 megawatt coal-fired power plant for which an additional financing of around $800 million will be required. Most of this will come from Chinese banks.
Prime Minister Nawaz Sharif’s November visit to China has boosted the project which is part of a massive $45.6-billion investment plan for Pakistan.
Shaikh said that few issues related to the tariff of the power plant have also been sorted out. “Various government departments are working really closely with us now,” he said. “We meet every week to work on the issues and discuss ways to address them.”
Published in The Express Tribune, December 12th, 2014.
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good development
Why should Pakistan provide guarantees for a project owned by Engro? . This is exactly what Engro has been lobbying for since day 1 - Engro has no expertise in coal mining, hasn't been willing to put it's own capital at risk, hasn't been able to attract stand alone financing (like every other coal mine in the World). Chinese originally told Engro that it wouldn't consider the deal until Engro put up the std capital expected of an owner -- now that's been shifted to the Pakistani taxpayer - why?