Completed Development AidData Chinese Aid

[IPP] ICBC provides PKR 727,352,000 loan for 49.5MW Sachal Wind Power Project (Linked to Record ID#52660)

$2.6M USD

Funder	Industrial and Commercial Bank of China (ICBC)
Recipient Organization	Sachal Energy Development Pvt Ltd (SEDL)
Country	Pakistan
Start Date	Feb 15, 2015
End Date	Apr 08, 2033
Duration	6,627 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`72072`

Grant Description

[IPP] ICBC provides PKR 727,352,000 loan for 49.5MW Sachal Wind Power Project On February 15, 2015, the Industrial and Commercial Bank of China (ICBC) and Sachal Energy Development Pvt Ltd (SEDL) entered into a $100 million (USD-denominated) loan facility agreement for the 49.5MW Sachal Wind Power Project in Jhimpir, Pakistan.

SEDL also entered into a 727,352,000 Pakistani rupee (PKR-denominated) loan facility agreement with ICBC-Pakistan (worth $7.134 million USD).

The total cost of this independent power project (IPP) was $130.481 million and it was reportedly financed according to a debt-to-equity ratio of 80:20.

📋 Loan / Grant Terms

💰 Loan Amountagreement

📅 Maturity12 years

⏳ Grace Period2 years

However, as of July 1, 2023, the loan's interest rate was reset to daily simple SOFR plus a 3.75% margin. Arif Habib Corporation Limited issued a corporate guarantee in support of the loan.

The loan was also secured (i.e. collateralized) against first charge of $107,134,400 (duly registered with Securities and Exchange Commission of Pakistan) over all present and future current and operating fixed assets of SEDL and a pledge of all shares in SEDL. The 727,352,000 Pakistani rupee (PKR-denominated) loan agreement is captured via Record ID#72072.

📋 Loan / Grant Terms

📅 Maturity12 years

⏳ Grace Period2 years

However, as of July 1, 2023, the loan's interest rate was reset to daily simple SOFR plus a 3% margin.

Sachal Energy Development (Ptd) Limited -- a project company (special purpose vehicle) that is 100% owned by Arif Habib Corporation Limited -- was established to finance, design, implement, and maintain the 49.5MW Sachal Wind Power Project.

The purpose of this project was to utilize wind resources for electricity generation through the construction of a wind farm with a total capacity of 49.5 MW and to deliver the electricity generated from the project to the power purchaser, i.e. National Transmission & Dispatch Company Limited (NTDC).

The project involved the installation of 33 Wind Turbine Generators (WTGs) from Goldwind. Each WTG had a capacity of 1.5 MW.

Hydrochina Corporation was the offshore EPC contractor and Hydrochina International Engineering Company Ltd Pakistan was the onshore EPC contractor for the project.

Sachal Energy Development Pvt Ltd signed a power purchase agreement with National Electric Power Regulatory Authority in February 27, 2014, and the National Transmission and Despatch Company (NTDC) agreed to purchase electricity at a tariff of USD 0.14861/kWh. The project's inauguration ceremony was held on April 20, 2015.

Construction began on December 11, 2015. All WTGs were installed by December 20, 2016. The purchaser and seller Interconnection facilities were energized on March 6, 2017. The project ultimately achieved its commercial operation date (COD) on April 10, 2017.

Compared with the Dawood Wind Power Project, another a Chinese bank-financed 49.5 MW wind farm with a purchase tariff of USD 0.1187/kWh, the electricity from the Sachal Wind Farm is more expensive. It is expected that the project will provide power supply to the national grid of 136,500 MWh per annum.

This wind power generation project site was developed on 275 hectares of land and it is located on Jhimpir within Thatta District and Sindh Province.

The Sachal 49.5 MW Wind Power Project was the first project with a signed loan agreement under China-Pakistan Economic Corridor (CPEC).

📋 Staff Comments

The Chinese project title is 巴基斯坦萨察尔50MW风电项⽬.
A 2013 tariff petition determination document released by National Electric Power Regulatory Authority (NEPRA) states that the debt financing costs of the project were to be shared between China CITIC Bank (80% of debt) and Askari Bank Limited (20% of debt). However, the tariff petition was ultimately rejected, which suggests that ICBC may have become the sole foreign financier to the project.
According to multiple, official sources, the Government of Pakistan has issued sovereign guarantees in support of all loans issued by Chinese state-owned banks for independent power projects (IPPs) in Pakistan (see https://www.fmprc.gov.cn/ce/cepk/chn/zbgx/t1735166.htm and http://pk.chineseembassy.org/eng/zbgx/202110/t20211010_9558510.htm and https://www.dropbox.com/s/bmx3w2b38o7guxm/Debt%20Pricing%20of%20IPPs%20%28002%29.pdf?dl=0). As such, AidData assumes that the loan captured in this record is backed by a sovereign guarantee from the Government of Pakistan.
For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.

📚 Sources & References

Escalating Growth Annual Report 2018
Arif Habib Corp Annual Report 2016
Sachal Energy Department, 'Belt and Road' PPP project case-Pakistan Sazar 50MW Wind Power Project
工商银行助力巴基斯坦萨察尔风电项目
中巴经济走廊首个签约项目实现商业运营
Project design document form for CDM project activities
一带一路 ”PPP 项目案例 —— 巴基斯坦萨察尔 50MW 风电项目
Sachal Energy Department (Pvt.) Ltd.
License Application Sachal Energy Development (Private) Limited
We do not have China debt problem: Umar
中国驻巴基斯坦使馆发言人就美方涉中巴经济走廊言论答记者问
Debt Pricing of IPPs (002)
NEPRA okays new financing mechanism for 59 IPPs of different technologies Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.