The federal government has committed to providing sovereign guarantee to Sindh Engro Coal Mining Company (SECMC) for its Thar coal mining project, said a statement on Tuesday. Based on the government''s commitment, the Ministry of Finance (MoF) has now approved a draft for a foreign currency loan agreement and sovereign guarantee document. The foreign currency loan for the project, which is part of the China Pakistan Economic Corridor (CPEC), is being provided by a consortium of top Chinese banks led by China Development Bank. ICBC bank also included in this consortium.
Moreover, MoF has also given a go-ahead to the terms and conditions of the local currency loan for the project needed for finalisation of local currency loan document and associated government''s guarantee. Sovereign guarantee for the project would be issued by a provision of backup guarantee by Sindh government. This now paves the way for the company to achieve financial close within this year.
The associated power plant being established by Engro Powergen Thal Limited (EPTL) is also well on its way to achieve financial close in the same time frame while the sponsors of the SECMC and EPTL have spent approximately four billion rupees to kick-start work on the project before financial close. Physical work is continuing at both sites in earnest and companies hope to achieve grid synchronisation by 2018. SECMC is developing a 3.8 mtpa mine and EPTL is developing a 660MW project in Thar. The capital cost of both projects is approximately US two billion dollars.