Linklaters has advised on one of the largest and most complex project financing deals along the China-Pakistan Economic Corridor.

Pakistan and China have signed financing agreements amounting to approximately US$1.95 billion for the development of the Thar Block II 3.8 MT/A coal mining project and associated 2x330MW coal-fired power plant to be developed in the Thar region of Pakistan. The project is expected to be commissioned in 2018.

The sponsors of the mining project include the Government of Sindh, Engro Powergen Limited, Thal Limited, Hub Power Company, Habib Bank Limited and China Machinery Engineering Corporation (“CMEC”). The sponsors of the power project include Engro Powergen Limited, Habib Bank Limited, CMEC and Liberty Mills Limited.  CMEC will also serve as the construction contractor for the projects.

Linklaters acted for the lender syndicate, comprising Chinese banks led by China Development Bank Corporation, Industrial and Commercial Bank of China Limited and China Construction Bank Corporation, and Pakistan banks led by Habib Bank Limited, United Bank Limited, Bank Alfalah Limited, Askari Bank Limited, Sindh Bank Limited, The Bank of Punjab, NIB Bank Limited, Habib Metropolitan Bank Limited, Faysal Bank Limited and Meezan Bank Limited. The financing package includes U.S. dollar, Pakistani rupee and Islamic Sharia-compliant tranches.

Zhang Chun, president of CMEC, has noted that this is the first integrated coal mining and coal-based power project among the projects in the China-Pakistan Economic Corridor, which is expected to push forward economic development in Pakistan.

The Linklaters team was led by partners Stuart Salt and Xiaohui Ji and counsel Andrew Compton.

“We’re honoured to have advised on this flagship project which is part of the China-Pakistan Economic Corridor,” said Mr Salt. 

Mr Salt said the corridor is a key component of the Chinese Government’s flagship One Belt One Road initiative.

Xiaohui Ji said Linklaters’ expertise in the energy sector covers traditional energy sources as well as onshore and offshore wind, solar, biomass, biofuels, wave/tidal, geothermal, hydropower, waste and waste to energy.

“Linklaters is deeply engaged in the One Belt One Road initiative and is currently also advising on two renewable energy power projects in Pakistan including the recently-closed 99MW UEP wind farm, and on one coal-fired power project in Indonesia, which are also priority deals in this important Chinese-led initiative” said Ms Ji.

“This latest deal demonstrates our expertise in complex and multi-jurisdictional deals across China and the region,” Mr Salt said.

“In addition, the transaction structure brought together a number of bespoke legal structuring issues, which makes it a ‘first of its kind’ for not only the One Belt One Road initiative but also for Pakistan,” added Mr Compton.

“We look forward to continuing to support our clients in the energy sector to sustain economic and social development both across the region and around the globe,” Ms Ji concluded.