Magazine article Economic Review

Hub Power Project

Magazine article Economic Review

Hub Power Project

Article excerpt

Hub Power Project which is the largest private power investment in Asia with a total capacity of 1,292 MW has gone into full production in March 25 clays earlier than the target date. It is built on Hub River in Balochistan, province 80 kilometers west of Karachi. The project consists of four oil fired thermal power units with on aggregate gross capacity of 1,292 MW and is supplying power to WAPDA burning Residual Fuel Oil whose PSO has undertaken to supply under a thirty-year Fuel Supply Agreement.

It is a unique project where a consortium of foreign firms, local agencies, and international organizations are involved in the construction, financing and operation of the project. It is being operated and maintained by NIP, a subsidiary of National Power. It has been constructed by a consortium of Italian, French and Japanese.

The total cost of the project is 1.5 billion US dollar although the project had mobilized 1.8 billion dollars. It covers 25 percent sponsors equity and 75 percent loan. 30 per cent covers from Special Fund set up by the World Bank and 45 per cent from local, foreign DFI's and Export Credit Agencies.

The project was conceived in the late 1980's when it was Asia's first build, operate and transfer (BOT) large scale project. The full agreement covers 30 years period.

The Hub Power Project was finalized when the first tranche of 686 million dollar began to flow from lending banks into the accounts of the company on January 28, 1996. The financial closure took place when the power station was already in an advanced stage of construction. By this time the Hub Power Project had become a build, own, operating company which would not only operate it but own it with the whole of its assets. The shares of the value US $30 million were floated in the name of Hub company on Karachi Stock Exchange.

In loan packages were put together by 5 banks offshore led by National West Minster, Bank of Tokyo, Citibank, Credit Lyon and Sakura Bank. …

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