Ministry of Planning, Development and Reforms has reportedly proposed that National Transmission and Despatch Company (NTDC) should float shares in stock market to ensure its financial sustainability and repayment of Rs 18 billion being availed from commercial banks for Thar-Mitiari transmission line project, well informed sources told Business Recorder. The project will transmit electricity produced from Thar coal-fired 1200MW power plant to the national grid.
The project for inter-connection of Thar coal based 1200 MW power plant with NTDC system was approved by the Executive Committee of National Economic Council (ECNEC) on August 16, 2012 at a total cost of Rs 22.305 million including FEC of Rs 5.055 billion. The pursuance of the approval bids have also been processed and are under evaluation as per given time lines. The expected completion date of the project is April 10, 2017. The project is on critical time line as this will facilitate evacuation of power from proposed 1200 MW power plant and other projects under the China-Pakistan Economic Corridor.
The sources said, NTDC's sponsored projects are either funded through foreign loans or through own resources arranged from local banks. As no funding is available from any foreign donor agency for this project due to urgency of the project, the Ministry of Water and Power allowed NTDC to arrange funds for the construction of the project at NTDC level through local banks.
For this purpose, NTDC approached scheduled commercial banks (AA+ rating) that showed their willingness to provide financing for the project to the tune of Rs 18 billion against sovereign guarantee. Proposed term sheets by the banks have already been referred to the Ministry of Finance.
Board of Directors of NTDC has also approved the proposal to arrange financing up to Rs 18 billion from local banks for interconnection of Thar coal fired 1200 MW power plant with NTDC system. According to sources, Ministry of Planning, Development and Reforms, has supported the proposal in principle as the availability of financing will ensure timely completion of the project. NTDC, however, before entering into agreement with the bank should ensure that at least one of the Thar coal projects has achieved a financial close to avoid any extra financial charges.
Planning Commission, sources said, has also proposed that NTDC should consider floating its shares in the stock market with a view to ensuring the company's financial sustainability and solvency enabling it to repay the loan in a timely manner. NTDC's projected financial position remains strong as it has adequate positive liquidity as well debt-payment ratios.
Ministry of Law and Justice has also cleared the proposal with the comments that no legal question has been identified for advice. However, the issuance of sovereign guarantee is covered by the provisions of the Fiscal Responsibility and Debt Limitation Act, 2005, thus requiring compliance with all codal formalities. China is funding 660 MW Thar coal-fired project being established by M/s Engro.
According to the Ministry of Water and Power, China has also agreed to finance another 660 MW coal fired project at Thar which will be operational in 2018. Recently, both sides agreed to add another project of 660MW for Thar Block-II and increase the mine size from 3.8 MTPA to 6.5 MTPA on priority list of the CPEC projects. Both sides also recognised the importance of +660 KV HVDC Transmission line from Matiari to Lahore which is very critical for evacuation of power from various projects planned in south in future.
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