Best Individual BRI Project or Initiative in the Region 2019
Thar Energy 330MW Lignite Coal Power Plant
Chances are, when you stumble upon a sizeable China-backed deal to invest in infrastructure in Pakistan, Habib Bank Ltd is involved. The Karachi-based financial institution, Pakistan’s largest lender by assets, wins plaudits and prizes this year, courtesy of a $520 million lignite coal-based power project in Sindh province. The deal was signed in December 2018 and the project will be built by Thar Energy, a consortium run by chief executive Saleemullah Memon, and comprising Hub Power Company, which owns 60% of the plant, local chemicals firm Fauji Fertiliser and China Machinery & Engineering Corporation.
The plant will be fuelled by local lignite coal, and will supply power to the national grid under a 30-year power purchase agreement. It is set to start operations in 2021, providing electricity to 600,000 Pakistani households, and reducing dependence on foreign fuel.
HBL was central to getting the project funded and approved, acting as exclusive financial adviser and local-currency-mandated lead arranger on a deal that involves a blend of local and foreign currency debt – the latter provided by China Development Bank – along with credit enhancement from Sinosure.
To mitigate risk, it structured a credit-enhanced guarantee that shelters the portion of commercial risk not covered by Sinosure, China’s top export insurance provider. HBL acted as inter-creditor agent and security trustee, advised on the capital structure and worked within a limited timeframe with the State Bank of Pakistan to get approval for the sizeable capital commitment. It led the arrangement process on the local currency tranche, worth PRs36.5 billion ($230 million).