An agreement was signed for financing Pakistan’s first open-pit coal mine in Tharparkar district that is a rich flush of natural resources. This agreement will claim the coal mine discovered in the 1990s but still been unexploited because of finances.

It is a largest financial deal between a consortium of HBL, UBL and Bank Alfalah that will collectively lend Rs50 billion to Sindh Engro Coal Mining Company (SECMC) that is a joint venture of 5 companies with Sindh government. This deal includes$2-billion project of 660MW coal-based power plant costs that also includes a coal mine with 3.8 million tons a year coal capacity. The finances of the project are expected to be closed in two months after being sealed.

“No one believed us that we can achieve this target even PM Nawaz Sharif doubted us. We sent coal to Berlin for testing persistently fighting all doubts about the quality of coal. PM Nawaz eventually trusted and backed us in this project” said, Syed Qaim Ali Shah, Sindh Chief Minister during inking ceremony of the agreement.

The other documents are Master Shareholder Agreement between Engro, House of Habib’s Thal Limited, Hub Power Company, HBL Bank, and China Machinery Engineering Corporation. This agreement covers the regular value membership of SECMC by the five private sponsors. For holding the major stake in company implementation agreement is signed between the Sindh government and SECMC.

“Everyone used to ask me when will we see the coal for almost eight years. I can now say very soon we will see that as the mine and coal power plant will be completed by 2018”, said Shams Uddin Shaikh, CEO SECMC. The project will not be possible without western banks support and government’s sovereign guarantee, he said. He assured everyone that they will follow guidelines of the World Bank and IFC regarding emissions from coal power plant.

Chinese lenders have agreed to terms of Libor plus 3.3% while local banks have a rate of Libor plus 1.7%.

“I am thankful to Chinese banks and companies for financing this project when other international lenders abandon this. The technological advancement in the country increases the demand for energy and status of energy in country is miserable and this project will help fight to meet needs.”, said Hussain Dawood, the Chairman of Dawood Hercules, which in turn controls Engro and Hubco

Answering to a question that Dawood Group takes the chancy dormant project for so many years. He replied that investor must take chances that seem “illogical.” He related energy and business and said that if I had invested in textile. What would be the status of textile industry with no power to run.

He reminded that in such important ceremony with dignitaries has 3 spans of power outages in just two hours. Earning MWs is not lost on him he said.

The project has a debt of $1.5 billion including $800 million that is financed by China Development Bank and Industrial and Commercial Bank of China. Chinese contractor of the power plant will also contribute $200 million while $500 million contributed as equity by SECMC’s sponsors.