KARACHI: The power industry regulator has accepted an application of K-Electric and two Chinese companies that are seeking power generation licence for an imported coal-based project of 700 megawatts being set up in Karachi.
K-Electric, China Datang Overseas Investment Company and China Machinery Engineering Corporation (CMEC) are sponsors of a special purpose vehicle – Datang Pakistan Karachi Power Generation (Private) Limited, which has submitted the application for the grant of licence from the National Electric Power Regulatory Authority (Nepra).
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“Datang Pakistan intends to supply electric power generated from its plant to K-Electric,” said Nepra in a notification. The electricity will be sold for a period of 30 years from the commercial operations date.
According to the application, 51% of equity stake in the project is owned by China Datang Overseas Investment Company, 25% by CMEC and the remaining 24% by K-Electric.
The sponsors are developing two plants of 350-megawatt each based on imported coal under an upfront tariff regime prescribed by the regulator.
Project cost and financing
The cost of the project is estimated at $967.23 million comprising 30% equity and 70% debt. The project will be developed in the vicinity of Port Qasim, Karachi and is expected to start production by December 2020.
Datang Pakistan has engaged both foreign and local banks for project financing. China Development Bank has already issued a term sheet of around $750 million to the sponsors. Sinosure has also given its preliminary letter of intent to the sponsors to financially support the project.
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For local financing, Habib Bank, National Bank of Pakistan, Bank Alfalah, Meezan Bank and Faysal Bank have expressed a strong interest in acting as a consortium of local currency lead arrangers.
In order to transmit power from the project, the electricity purchaser K-Electric has undertaken a $400 million transmission project called TP-1,000, say application documents. Financing for the transmission line has been finalised and construction has begun.
The three sponsors of the power project have agreed to take coal supply from mines owned by the majority stakeholder – China Datang Overseas Investment Company.
“China Datang has strategic coal-mining interests in Indonesia and is already supplying coal to most of its plants across the region and in China,” the documents said.
Besides Indonesia, the company also has the choice to import coal from South Africa. It may consume domestically produced coal in the beginning. Light diesel oil is the secondary and back-up fuel for the thermal power project. This option could be utilised only in emergency cases and start-up stages.
Courtesy : Express Tribune