Dasu hydropower project ECC Okays $350m Guarantee

Government guarantee for commercial financing of US $ 350 million from the international market under the World Bank partial guarantee for the Dasu hydropower project is approved by The Economic Coordination Committee (ECC) of the Cabinet.

A meeting of the ECC presided over by Finance Minister Ishaq Dar was sought by Ministry of Water and Power to approve the government guarantee for repayment of US $ 140 million loan – 40% of loan $ 350 million – and was informed that the World Bank will provide guarantee for the remaining $ 210 million.

The ECC also approved mark-up payments for the entire loan amount of US $ 350 million except for 3rd year of loan on which no guarantee from any agency is required.

Additionally, WAPDA will also be required to pay a guarantee fee @ 0.75% per annum on the IDA partial credit guarantee (PCG) of US $ 210 million provided for US $ 350 million loan. WAPDA, as a borrower of $350 million, is responsible to repay this loan amount from hydel power sale income.

The Ministry of Water and Power stated that after lengthy deliberations with international banks along with the World Bank, it was agreed that Wapda would raise US $ 350 million upfront through the international capital market for a 10-year tenor by using PCG of up to 60%, which is US $ 210 million equivalent to four times of surrendered IDA credit of US $ 52.5 million and the remaining amount (both principal and interest) would be guaranteed by a government guarantee.

The Ministry of Water and Power stated that the remaining Foreign Commercial Component of approximately US $ 500 million would be raised either through loan or bond in early 2018 by using the remaining partial credit guarantee of US $ 250 million ($ 460 million minus $ 210 million).