Project Highlights

General

First independent hydropower producer (IPP) in Pakistan/AJ&K;
Installed plant capacity of 84 MW, with annual generation potential of 736 GWh;
Annual electricity generation of 540 GWh based on historic hydrology; annual Take-or-Pay level 470GWh;
Situated near the New Bong Escape, some 7 Km downstream from the Mangla Dam and 120 km from Islamabad capital city of Pakistan;
Developed under B.O.O.T and transferred free of cost to the Government at the end of the 25 year term;
High efficiency, low head, bulb turbines based on mature and proven technology from internationally recognized turbine manufacturers.
Construction start expected in December 2008; partial generation in end 2010; full plant commissioning on or before December 31, 2011.

Total current Project cost is estimated at about US$ 216 million to be financed at a debt equity ratio 75/25; financing for US$ 121 million is in place through consortia comprising the Asian Development Bank (ADB); the Islamic Development Bank (IDB), and Pakistan commercial banks National Bank of Pakistan (NBP) and Habib Bank Limited (HBL); the commercial banks have shown willingness to finance the additional funding requirement of about US$ 41 million; however, arrangements are being finalized with a new foreign lender introduced by HBL;
Project equity is held by The Hub Power Company Limited and the Sponsors; commitment for further equity and sponsor support is in place;
Loan Documents for financing of the Project signed on June 30, 2007; financial close and construction start expected by November/December 2008;
The Levelized Reference Tariff (at financial closing) based on the revised project cost on a cost plus basis is expected to be between US¢7.5-8.5/KWh
Energy above 470 GWh will be paid at a special rate of 10% of the prevailing tariff;
Hydrological risk borne by the power purchaser through guaranteed payment/ Take or Pay for 470 GWh per annum irrespective of actual energy delivered;
Qualifies as a CDM project under Kyoto Protocol subject to registration which is well under way by DNV a UNFCCC approved operational entity. Final validation report has been issued and the Project has applied for registration with UNFCCC Executive Board.

Robust hydrology derived from data maintained by the Mangla Dam Organization for past 81 years providing a sound and reliable hydrological basis for energy estimation and high degree of assurance to the power purchaser as basis for the committed minimum energy payment;
Well-regulated and dependable water releases through Mangla Powerhouse into the Bong canal available to the Project, after satisfying the Upper Jhelum Canal (UJC) indent;
Mangla Raise project (raising the storage of Mangla Reservoir from 4.7 MAF to 7.6 MAF) due for completion by 2010 will further strengthen and regulate project hydrology and water flow.

Robust Power Purchase Agreement reflecting payment obligations of the power off-taker NTDC (previously WAPDA) are guaranteed by the GOP;
GOP Guarantee provides protection against political force majeure events, changes in law, water rights, invalidity of AJ&K concession documents & other obligations of Governmental entities in Pakistan/AJ&K and provides a bail-out opportunity in case of such events;
Tariff insulated for:

changes in US$/Rupee exchange parity;
changes in interest cost due to variation of LIBOR/KIBOR interest rates;
exchange risk, measured in US$, for euro, pound sterling or Japanese yen components of EPC cost;

NTDC Letter of Credit provides for maximum energy payment in a month based on average historic generation (expected to be about US$ 5.0 million in year-1);
Project is assured priority despatch and Take-or-Pay through Minimum Monthly Energy Payment.

The Project is environmentally friendly with negligible impact on hydrological regime, there is no impoundment of water or impact on aquatic life; no human displacement/ resettlement is anticipated.
Environmental Impact Assessment (EIA) carried out in accordance with ADB standard procedures; all potential environmental and social impacts are predicted, with mitigation measures in place to minimize such identified impacts. The EIA is posted on ADB web at http://www.adb.org/Documents/Environment/PAK/bong-hydropower.pdf
The EIA and Environmental Management Plan is duly approved by the ADB.