Pakistan power plant reaches financial close with CDB loan

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Pakistan's government has announced the financial closing on a 330MW lignite-fired power plant in Sindh province. The US$497 million plant is being developed by ThalNova Power Thar Private Limited (TNPTL), an associated company of Hub Power Company Limited (Hubco), the country's largest independent power producer.

The financing was signed on October 1 during a ceremony chaired by Shah Jahan Mirza, managing director of the Private Power & Infrastructure Board (PPIB), in Islamabad.

The debt-to-equity ratio will be 75:25, with debt provided by China Development Bank (CDB), together with Habib Bank as lead arranger for the financing in Pakistan. TNPTL has been incorporated to develop the mine-mouth power plant, using local lignite from Thar Coal Block II. Hubco has a 38.3% stake. Its partners are Novatex Limited, China Machinery Engineering Corporation, and Descon Engineering Limited.

Pakistan Stock Exchange-listed Hubco has an installed capacity of producing over 2920 megawatts through its four plants in Hub, Narowal and Azad Kashmir. The company has four projects in the China-Pakistan Economic Corridor (CPEC): imported coal-based China Power Hub Generation Company (Private) Limited (CPHGC) at Hub, as well as Thar Energy Limited (TEL), Thalnova Power Thar (Pvt.) Ltd., and Sindh Engro Coal Mining Company (SECMC) at Thar Coal Block II.

The Thar desert has some of the biggest coal reserves in the world, and the mine-to-coal facilities are important Belt & Road Initiative projects within the CPEC. Not only are they viewed as important for Pakistan's economic development, but they also contribute to energy security, and are not a drain on foreign exchange earnings.

The Thar Engro Coal Power Project (also known as Thar-II or Thar Coal Block II) will eventually consist of three phases. Phase I consists of an open pit mining project and two 330MW lignite sub critical coal-fired power plants. In Phase II, the mine is being expanded to yield 13.5 million tonnes of coal and in Phase III, the mine will be expanded to yield 19.5 million tonnes of coal annually in order to support 3,600MW of power generation.

In July 2020, Engro Powergen Thar (Private) Limited (EPTL) – a majority-owned company of Engro Energy – and Sindh Engro Coal Mining Company (SECMC) – a joint venture of the government of Sindh and Engro Energy with other corporate partners – completed one full year of commercial operations of the Block II mine and power plant. Hubco also holds an 8% shareholding in SECMC.

SECMC  unearthed the first layer of coal in June 2018, and started commercial operations for 3.8 million tonnes per annum (mtpa) output of lignite coal under the first phase of its plan in July 2019. EPTL, which operates two 330MW mine-mouth power plants in Thar Block II, started commercial operations around the same time. The company is a joint venture between Engro Powergen Ltd., China Machinery Engineering Corporation, Habib Bank, and Liberty Mills. 

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