Southern Electric Raiwind Diesel Power Plant

distressed

The US$168.0 million, 117-MW (5 x 23.4-MW), power plant at Raiwind was developed by the Southern Electric Company Ltd. (SEPCOL). This consortium consisted of Kilborn Engineering Pacific Ltd. (a unit of SNC-Lavalin since 1996) and BC Hydro. In 1999, BC Hydro sold its stake of Raiwind power plant to SNC-Lavalin for US$1.6 million. As of December 2007, SNC-Lavalin (21%) was the largest single equity holder in SEPCOL. An equity flotation of 10.5 million shares, underwritten by Crescent Investment Bank and First Capital Securities Corp, is part of the financing package. Additional financing is being obtained through the Private Sector Energy Development Fund (PSEDF), which was funded by the Japan Exim Bank and the World Bank (US$35 million in 1996). The project has a 22-year power purchasing agreement with WAPDA and a 22-year fuel supply agreement with the Pakistan State Oil Co. (PSOC). This project was scheduled to become commercially operational by the end of 1997. SEPCOL failed to generate sufficient revenues to service its long-term debt (Long-term Credit Fund [LTCF]) and defaulted on October 25, 2006. Although SEPCOL then managed to restructure its debt, rising fuel prices forced it to rely upon advance energy purchase payments from from WAPDA in order to cover its fuel costs. At the end of each month, these advance payments were adjusted in line with SEPCOL's actual monthly energy invoice. This arrangement continued until January 31, 2008. In February 2008, WAPDA discontinued the advance energy payment, leaving SEPCOL unable to to finance its fuel requirements, which resulted in the complete shutdown of the complex on February 15, 2008. Subsequently, Wapda served a default notice to the company and imposed Liquidated Damages (LDs) for failure to operate the plant. SEPCOL contested the imposition of LDs, filed suit against WAPDA and issued notice for arbitration. SEPCOL also approached various banks to secure additional Working Capital lines. However, as of 2009, SEPCOL was not able to secure additional WC lines and the dispute with WAPDA was ongoing.