Lahore - Neelum Jhelum Hydropower Company (Pvt) Limited (NJHPC) has entered into a financing agreement, amounting to Rs100 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 held at local hotel here on Wednesday, and was attended by President & CEO NBP Syed Iqbal Ashraf, Chairman WAPDA Zafar Mahmood, Member Finance WAPDA Anwaarul Haq and CEO NJHPCL Ltd Gen (r) Muhammad Zubair, along with presidents and senior officials of all the 16 participating financial institutions. 

NJHPC mandated National Bank of Pakistan (“NBP”) to act as Mandated Lead Arranger (MLA) for arrangement of up to Rs100 billion through the 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.

Ashraf, President NBP, said, “The Sukuk is structured with a tenor 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 the financial market of Pakistan, and will help devise 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 GoP 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.

The mega project has been undertaken in the country long after the completion of Mangla and Tarbela Dams. 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 Rs50 billion annually for WAPDA as per existing tariff. The first turbine is scheduled to commence operation by end of June 2017.

Addressing the ceremony, WAPDA chairman said, “This is the largest ever funds mobilisation 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 added.

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 making this landmark deal a reality.

“The issuance of Sukuk, worth Rs100 billion for NJHP, will go a long way in arranging funds for other hydropower projects to be initiated in the country in near future,” he hoped.

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 involves 90 percent construction work under the mountains, and only 10 percent above the surface,” he informed.

He said that work on the project was progressing at a fast pace, while overall progress on it was around 82 percent so far.