Recent Pakistan energy law credited in successful power project financing
The AES Corp. of Arlington, Va., USA, has announced successful completion of a financing package for AES Lal Pir, the first of its two 337-MW power plants to be located in Muzaffargarh, Pakistan.
Construction is under way through a turnkey contract with Nichimen Corp., with key equipment to be supplied by Mitsubishi Heavy Industries. Construction should be completed in 1997.
“We are particularly pleased with the structure of Pakistan`s Private Power Initiative and the speed with which we were able to work with the government of Pakistan; the Water and Power Development Authority, our customer; and the Pakistan State Oil Company (PSO), our fuel supplier,” said Dennis W. Bakke, AES president and CEO.
The financing package for the (US)$375-million project includes a loan of (US)$240 million arranged by the Bank of Tokyo, Sanwa Bank and Deusche Bank and insured by the Export Import Bank of Japan. The International Finance Corp. will provide a loan of (US)$40 million plus an equity investment of (US)$9.5 million. AES will provide the remaining (US)$85.5 million in equity.
WAPDA, the Pakistan state-owned utility, will purchase electricity under a 30-year agreement providing for indexation of the Pakistan rupee to US dollars and Japanese yen. PSO will supply fuel under another 30-year agreement. The government has executed an implementation agreement guaranteeing currency convertibility and the obligations of WAPDA and PSO under their agreements with AES.
“The government of Pakistan is pleased to see the successful financing of the AES Lal Pir project, which we consider to be a testimony to the bankability of our New Energy Policy, announced in March 1994. The government of Pakistan stands fully committed to provide continued support to the Lal Pir project and other private power projects during their development, financing, construction and operation,” said Hassan Nawab, Private Power and Infrastructure Board executive director for the Pakistan government.