PAKISTAN: Hubco signs short-term financing

18 March 1994

The sponsors of the 1,292-MW Hub River private power project in Baluchistan signed another short-term financing on 2 March to enable construction work to continue while the final financing package is being negotiated.

The deal involves a six-month morabaha (cost-plus financing) arrangement for $110.3 million, structured and underwritten by Islamic Investment Company of the Gulf (IICG), a wholly owned subsidiary of Dar Al Maal Al- Islami Group. Faysal Islamic Bank, National Bank of Pakistan, ABC Investment & Services Company and National Commercial Bank of Jeddah acted as co- modarebs. The financing was arranged by the local Al-Faysal Investment Bank.

The arrangement is the third in a series of six-month Islamic deals designed to cover the costs of mobilisation and construction work. It follows a $106 million facility which was to have been repaid to Al-Rajhi Banking & Investment Corporation of Saudi Arabia in February (MEED 24:12:93).

The project client, Hub Power Group (Hubco), is still negotiating with commercial banks and international lending institutions for a long-term financing package to cover most of the $1,890 million investment. Hubco is still preparing the final information memorandum to be handed out to banks as the basis for the $675 million commercial loans syndication.

The first tranche of long-term financing was signed with the UK's Commonwealth Development Corporation in December.

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