National Bank of Pakistan (NBP) will raise Rs 100 billion Sukuk with consortium of 16 banks for Neelum Jhelum Hydropower Company (Pvt.) in an agreement based on Diminishing Musharaka structured by NBP Aitemaad.
NJHPC (Neelum Jhelum Hydro Power Company) 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.
The signing ceremony was held at local hotel here on Wednesday and attended by President and 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 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 tenors.
This Sukuk will also provide avenues for Islamic Banks and Mutual Funds to invest their liquid funds in a tradable government guaranteed Islamic instrument.
The Neelum Jhelum Project is a hydropower generation facility that envisages the diversion of Neelum River water through tunnels which falls 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 for WAPDA as per existing tariff. The first turbine is scheduled to commence operation by end of June 2017.
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.
Neelum Jhelum Hydropower Project is a world class underground power generation facility being constructed on River Neelum in Azad Jammu & Kashmir. The project envisages 90% construction work under high mountainous overburden and only 10% above the surface. He said that construction work on the project is progressing at a fast pace and overall progress of the project is around 82 per cent so far.