June 22, 2016: In what can be termed a significant development towards achieving the much-awaited financial close of the strategically important 969 MW-Neelum Jhelum Hydropower Project (NJHP), the Pakistan Water and Power Development Authority (WAPDA) today entered into a financing agreement amounting to Rupees 100 billion with a consortium of 16 banks led by National Bank of Pakistan (NBP) for raising Pakistan’s largest Shariah compliant infrastructure corporate Sukuk, based on Diminishing Musharaka which is structured by NBP Aitemaad.
The signing ceremony was held at Karachi. WAPDA Chairman Zafar Mahmood, NBP President and CEO Syed Iqbal Ashraf, WAPDA Member (Finance) Anwar-ul-Haq, NJHP CEO Engineer Muhammad Zubair along with Presidents and senior officials of all the 16 participating financial institutions attended the ceremony.
Addressing the ceremony, WAPDA Chairman said this is the biggest ever quantum of funds that has been arranged from the local banks for any public sector project in the history of Pakistan. This historic achievement reflects not only investor 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 the record amount for NJHP. The issuance of Sukuk worth Rs.100 billion for NJHP will go a long way in arranging funds for other hydropower projects as well to be implemented in the country in near future, he further said.
The Chairman said that 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 good pace and overall progress on the project stands at 82 per cent so far. With financial arrangements in place, WAPDA is confident to commission the first unit of the project in July 2017 followed by phased completion of the other three units by the end of December 2017. The project, on its completion, will contribute 5.15 billion units of low-cost and environment friendly electricity to the national grid per annum, he added.
Later, NBP President said that the Sukuk is structured with a tenure of 10 years and is backed by the sovereign guarantee from 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 Government of Pakistan guaranteed Islamic instrument, he further said.