ISLAMABAD: The Water and Power Development Authority (Wapda) is preparing to raise $ 500 million in international commercial loans through Eurobonds to meet the foreign financing needs of the Diamer-Bhasha and Mohamand dams.
The cabinet’s Economic Coordination Committee (ECC), which meets later this week, is expected to formally approve the launch of Wapda bonds overseas in addition to making a decision on the fate of the gas air-mixing plants in liquefied petroleum (LPG).
This is the first time that Wapda has launched Eurobonds without government sovereign guarantee due to the positive ratings of business families (B3 stable by Moody’s) by the main international credit agencies. Wapda needs more than $ 2 billion in foreign funds for the two megaprojects, but plans to raise these funds in a phased manner in accordance with construction needs in order to avoid unnecessary financing costs.
Wapda has already awarded contracts for the Diamer-Basha dam at a cost of Rs442bn Mohamand Dam at a cost of Rs310bn to two separate consortia of Chinese and Pakistani companies. In the first phase, Wapda passed a summary through the Ministry of Water Resources to launch $ 500 million Eurobonds.
Officials said Wapda expected the bond to attract nearly the same rate as Pakistani sovereign papers given an equivalent credit rating. Officials said Wapda will use funds for both projects as needed and will turn to the international capital market again when more funds are needed.
The government started construction of the Mohmand Dam in June 2019 and the Diamer-Bhasha Dam in May of this year. The Mohamand Dam will have a gross water capacity of 1.9 million acre feet (MAF) of water and a useful capacity of 0.67 MAF with an electricity generation potential of 800 megawatts and an annual energy production of 2,862 GWh.
The Diamer-Bhasha dam will also increase the lifespan of the Tarbela dam by approximately 35 years.
Posted in Dawn, December 23, 2020