LAHORE: (APP) Neelum Jhelum Hydropower Company (Pvt.) Limited (NJHPC) on Wednesday entered into a financing agreement amounting to Rs 100 billion with a consortium of 16 banks led by National Bank of Pakistan (NBP) for raising funds through one of the largest Shariah compliant facility. The financing is based on Diminishing Musharaka structured by NBP Aitemaad.
The signing ceremony was attended by President & CEO NBP Syed Iqbal Ashraf, Chairman WAPDA Zafar Mahmood, Member Finance WAPDA Anwaar ul Haq and CEO NJHPCL Lt. Gen (R) Muhammad Zubair along with presidents and senior officials of all the 16 participating financial institutions.
The NJHPC mandated National Bank of Pakistan (NBP) to act as Mandated Lead Arranger (MLA) for arrangement of up to Rs 100 billion through issuance of rated, secured and privately placed Sukuks to partially finance the construction of strategically important 969 MW hydel power project located in district Muzaffarabad, Azad Jammu & Kashmir.
Addressing the ceremony, WAPDA Chairman said, "This is the biggest ever funds mobilization for a public sector entity in the history of Pakistan in which 16 local banks have participated. Achieving this milestone reflects not only investors' confidence in the Federal government and WAPDA but also indicates the potential of investment that hydropower sector offers in the country."
He expressed gratitude to the Prime Minister, the Federal Minister for Water and Power and the Federal Minister for Finance for their guidance and continuous support in arranging this landmark deal. The issuance of Sukuk worth Rs 100 billion for NJHP would go a long way in arranging funds for other hydropower projects as well to be initiated in the country in near future.
The Chairman said that Neelum Jhelum Hydropower Project was a world class underground power generation facility being constructed over River Neelum in Azad Jammu & Kashmir. The project envisages 90 percent construction work under high mountainous overburden and only 10 percent above the surface. He said that construction work on the project was progressing at a fast pace and overall progress of the project was around 82 percent so far.
On this occasion the NBP President said, "The Sukuk is structured with a tenure of 10 years and is backed by the sovereign guarantee by the Government of Pakistan. This Sukuk has received a preliminary rating of 'AAA' from JCR-VIS and is expected to have a wider impact on financial market of Pakistan, helping augment a funding format that has been predominantly constrained to smaller deals with shorter tenures. This Sukuk will also provide avenues for Islamic Banks and Mutual Funds to invest their liquid funds in a tradable GoP guaranteed Islamic instrument."
The Neelum Jhelum Project is a hydropower generation facility that envisages the diversion of Neelum River water through tunnels which fall into Jhelum River after producing power. This mega hydropower project has been undertaken in the country long after completion of Mangla and Tarbela Dam projects. On completion, the facility will be capable of producing 5.15 billion units of electricity annually. This unit falls under "green energy" that will fetch total revenue of up to Rs 50 billion annually to WAPDA as per existing tariff. The first turbine is scheduled to commence operation by end of June 2017.