New Bong Escape Hydropower Project

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In December 2009, the New Bong Escape Hydropower Project, developed by Laraib Energy Limited (LEL) at the New Bong escape on the Jhelum river in the state of Azad Jammu and Kashmir (AJ&K), reached financial closure. The 84 MW power plant was developed on a build, operate and transfer (BOT) basis for a term of 25 years. The power generated by the plant was to be sold to National Transmission and Dispatch Company (NTDC), a state-owned national transmission company, under a 25 year power purchase agreement (PPA), valid until 2037. This project was the first hydroelectic IPP in Pakistan. LEL was originally set up as a joint venture between Malaysia’s Ranhill Bhd (51%) and a group of private Pakistani investors led by Mr. Khalid Faizi. LEL conceived this project in 1995 and conducted the required feasibility study. In May 1996, LEL received a letter of support from the Government of Pakistan to commercially develop the project. However, the project met with significant delays largely attributable to the economic downturn and to disputes with thermal IPPs in the late 1990s. The total project cost was originally estimated at US$ 149.2 million. Loans from ADB, IDB and local commercial banks were signed in June 2007 but were put on hold due to a change in sponsorship. Ranhill was replaced by Hub Power Company Limited (HUBCO), which became the principal equity holder in the project (75%). Hubco's principal shareholders were International Power (17%), Xenel Industries (12%) and Fauji Foundation (9%). In 2012, International Power divested its shares to Dawood Group and Allied Bank Limited. The Fauji Foundation increased its share to 10.12% equity share. Aside from HUBCO, Coate & Co. Limited (16.67%) and Asghar Ali Sons & Co. (7.78%) had equity interests in the project. Commissioning was expected for May 2013. The project received a tariff of $0.085 per kWh under the 25 year PPA. Under an earlier March 2003 PPA the tariff was reported as US$0.031/kWh according to Dealogic. The project reached financial closure July 2nd, 2007. On Dec. 1, 2009, when the Government of Pakistan (GoP) executed the sovereign guarantee in a signing ceremony between LEL and PPIB. The total project cost as of the financial closure date was approximately US$233 million. Total sponsors' equity contribution was US$58 million (25% of total project cost). Debt (75% of total project cost) comprised two tranches: a US$40.6 million local currency-denominated 12 year term-loan from local commercial banks, Habib Bank and National Bank of Pakistan; and a US$134.4 million 15 year, USD-denominated multilateral debt tranche comprising US$35 million from IFC, US$37.3 million from IDB, US$37.3 million from ADB and US$24.8 million from Proparco. http://www.hydroworld.com/articles/2007/07/pakistans-84-mw-new-bong-escape-closes-financing.html