Finance for the Thar coal project is closed by Shanghai Electric

China's Shanghai Electric Corporation has successfully reached financial closure for Pakistan's largest coal-fired power plant, a pivotal initiative within the China-Pakistan Economic Corridor (CPEC), as announced by the Private Power and Infrastructure Board (PPIB) on Wednesday.

Situated in the Thar desert in Sindh, the 1,320-megawatt (MW) plant will utilize supercritical technology to generate electricity at an impressively low tariff of Rs 4.98 per unit. The signing of the financial closure took place at a ceremony in Islamabad, attended by notable figures such as PPIB Managing Director Shah Jahan Mirza, Meng Donghai (Chief Executive of Thar Coal Block-1 Power Generation Company), Zhou Bo (CEO of Industrial and Commercial Bank of China - ICBC, Karachi Branch), and senior officials from PPIB and the project company/sponsors, according to a statement from PPIB.

Initiated during the COVID-19 pandemic, the project, sponsored by the Shanghai Electric Group Corporation, managed to secure its financial requirements through equity and bridging financing and was completed on February 5, 2023, meeting the stringent deadlines set by the governments of both Pakistan and China.

The coal supply for the project comes from Thar Block-1, provided by Sino Sindh Resources Limited (SSRL). The lenders for the project include ICBC, China Development Bank, Bank of Communications Co. Ltd., China Minsheng Bank Corporation, Postal Savings Bank of China Co., Ltd., and Agriculture Bank of China, with Sinosure serving as the insurer. The power plant boasts state-of-the-art equipment to adhere to environmental standards set by the World Bank/IFC and Pakistan EPA.

Highlighting its economic impact, the statement reveals that the project is the second most cost-effective power initiative in terms of fuel cost, contributing to an annual saving of approximately $500 million in foreign exchange for Pakistan. The plant is anticipated to generate nine billion units of electricity annually, leading to an annual reduction of around Rs200 billion in the overall basket price of electricity.