Lucky Cement to award power plant contract

KARACHI: Lucky Cement said on Monday it hopes in the next month or so to award a contract to build a 660-megawatt coal-fired plant at the country’s industrial hub as the company has started negotiations with potential contractors.

“Negotiations with potential EPC (engineering, procurement and construction) contractors have started and the EPC contract will be concluded during the month of May 2016,” the company said in a bourse filing.

In March, the government issued a licence to Lucky Electric Power Company, a concern of Lucky Cement, to generate electricity from its 660-megawatt coal-fired plant in Karachi.

The Pakistan Power Infrastructure Board issued letter of intent to the Lucky Cement subsidiary, which plans to setup the plant on imported coal at Deh Ghangario, Bin Qasim Town.

The coal requirement of the Lucky’s project is likely to be handled at the Pakistan International Bulk Terminal (PITB) for which sponsors need to enter into coal handling agreement.

Lucky said it has targeted “to achieve a financial close in August 2016” but didn't give any further details.

Analysts said the project cost will cost around $1.08 billion and it will be built mostly through local financing. “The project would be undertaken with 25/75 percent debt to equity ratio and Lucky is expected to make a 25 percent of the investment required,” said an analyst. “The balance of 75 percent would be made available through seeking debt from the local financial institutions."

Lucky also said it has injected equity investment in another associated company for 50 megawatts wind farm project.

“Major construction activities have been completed and the project has entered the final phase of implementation i.e. testing and commissioning of the complex,” it added. “The project is expected to achieve COD (Commercial Operation Date) by the end of June 2016.”

Lucky Cement, the leading cement maker, has a combined production capacity of 7.75 million tons/annum. It plans to build a new cement plant in the north region of the country to meet growing demand.  The panned plant will be the company’s third production facility in the country. 

The company earlier said an initial work of the new plant worth $200 million is progressing fast and it is in talks with the Punjab government to acquisition land for the project. Similarly, it is also in the process of negotiating contract with the equipment suppliers.

Lucky cement has also initiated a $240 million plant in the Democratic Republic of Congo in June 2013. “The construction work at the project site is in full swing to achieve planned commercial operations date of October 2016,” the statement said.

“The effect of 50 percent share of the net assets of the Congo plant has been reflected in the consolidated unaudited condensed financial statements of the company for the nine months period ended March 31, 2016.”