YRM Investments Limited, a New York-based American company, has expressed interest to construct Neelum-Jhelum hydropower project on 'Build-Own-Transfer' (BOT) basis, official sources told Business Recorder."We have got approval from our board of consortium for financing several mega projects in Pakistan, including Neelum-Jhelum hydropower project. The investment in these projects will be more than $3 billion," sources quoted company's Senior Vice President (SVP) for Asia, Agha Shahid Khan, as saying in a letter to Wapda chairman.
The cost of electricity supplied would be 0.029 cent or Rs 1.45 per unit at the dam which, according to the company, might save for over 180 months approximately $7 million per month, or $1.260 billion over a 15-year period, compared to the regular cost of electricity. The company would be responsible to construct transmission line from powerhouse to Rawat grid station.
The company, while extending financial proposal for consideration, said that the loan would be extended by a consortium of financial services companies and banks including World Bank, Export/Import Bank, J P Morgan Chase, HSBC, a private trust. The interest rate for this project would be Libor+1.5 percent per year with US guarantee through Exim Bank.
The consortium would charge commitment fee at the rate of 0.25 percent while no management fee will be applicable, Shahid was quoted as saying.
The project base cost would be $1.5 billion+10 percent as profit margin for the consortium. The debt ratio would be 100 percent as no equity would be required for the project.
The terms of the loan would be for 20 years plus 1 day. The grace period would be 7 years, while repayment would start in 7 years or 6 months after the electricity is first on line, if sooner than 7 years. Customs duties as calculated would be around $85 million. The credit insurance from Exim Bank is evaluated at Rs 1.5 percent per annum.
The company would construct a new model city for 15,000 people and hire 5,000 local workers. The city would comprise of houses, schools, hospital, and power generation unit. The project would be handed over to Wapda after completion. However, the company would be ready to operate and maintain the project on separate agreement based on actual cost ie overhead cost, maintenance costs plus 10 percent which is the only profit margin of the consortium, Khan said.
The YRM Investment also indicated to bring 'Benham Group', a highly professional and competent company, to erect a state-of-the-art project. The project would be a landmark in the history of Pakistan, the company promised.