KARACHI: K-Electric (KE)’s plan to reduce its reliance on national grid is progressing smoothly as National Electric Power Regulatory Authority (NEPRA) has admitted the Chinese company’s generation license application to provide 700MW electricity to KE. NEPRA has admitted the application for the grant of a generation license to Datang Pakistan Karachi Power Generation (Private) Limited (DPKPG) which is an entity incorporated to act as a special purpose vehicle and develop 3 2×350 MW imported Coal Power Project at Port Qasim, Sindh Province, Pakistan sponsored by China Datang Overseas Investment Co. Ltd. (CDTO), China Machinery Engineering Corporation (CMEC) and K-Electric Limited (KE). KE signed an agreement with Chinese companies to set up 700 megawatts of coal-fired power plants by 2018, entering into a binding joint development agreement (JDA) with CDTO and China Machinery Engineering Corporation (CMEC) to develop 2X350MW of coal-based power plant with a cost of $1 billion at Port Qasim. In this regard, KE has acquired and dedicated for the Company a suitable parcel of land which is located about 5.6 KM to the east of Port Qasim, Karachi, Pakistan. KE has entered into shareholders’ agreement with other sponsors of the company and will transfer the required portion of the land to the project company before financial close. Habib Bank Limited has been appointed as financial advisor and lead land arranger. As far as financing of the project is concerned, DPKPG has engaged both foreign and local banks to arrange financing for the project. With regards to Chinese financing, China Development Bank has already issued a term sheet of around $750 million to the Sponsors. In parallel, local financing route is also being pursued. Habib Bank Limited (HBL), National Bank of Pakistan, Bank Alfalah Limited, Meezan Bank Limited and Faysal Bank Limited have together shown strong interest to act as a consortium of local currency lead arranger. The entire power generated by the project will be sold to KE for a term of 30 years from the Commercial Operations Date. In order to evacuate power from this Project, the KE has undertaken a $400 Million transmission project financing for this transmission project has been finalized and the construction has already started. The man power for this project is estimated to be 456 persons (not including the manpower for jetty zone). With regard to fuel supply for this project, CDTO, the majority sponsor of this Project, having 80% of its power generation portfolio (120,000 MW) in China on coal, also has vast experience in the supply of coal both domestically in China and internationally. CDTO has its own strategic coal mining interests in Indonesia, and is already supplying coal to most of its plants across the region and in China. Therefore, the sponsors agreed to use CDTO’s vast experience in coal mining and supply and take over as coal supplier for this Project as well. This not only gives direct access to mines in Indonesia, it also protects the long term supply of fuel for this large scale project.