Engro Corporation on Monday announced its board had approved an investment of $21,375 million by way of subscription of ordinary shares in Siddiqsons Energy Limited.
Siddiqsons Energy Limited is a special purpose vehicle (SPV) established to develop around 330 megawatts of Thar coal-fired power generation facility in Block II, district Tharparkar Sindh on a build, operate and own basis, read the notification.
In a notification sent to the stock exchange on Monday, Engro Corporation said the deal remained subject to execution of relevant agreements.
The notification said Engro had entered into a joint-venture agreement (JVA) with Siddiqsons Limited and Arif Habib Limited “to set forth the terms and conditions governing their relationship and to record their respective rights and obligations in relation to the management and functioning of the SPV and other incidental matters relating to the SPV.”
According to a report in The Economist earlier this year, eight years ago the company bought the rights to one of 13 blocks, containing 1 percent of Thar’s 175 billion tonne coal reserves. To work on coal extraction, Engro formed the country’s biggest ever public-private partnership, the Sindh Engro Coal Mining Company (SECMC), in which it digs, and the state provides infrastructure. With no other competitor in sight, SECMC began work last year.
The company is expected to reach the coal by mid-2018, which will feed a power station owned by Engro and three others owned by SECMC partners.
According to The Economist, these power stations will produce one-fifth of the country’s electricity for the next 50 years, and Engro looks set to financially benefit from the deal.
Engro Corporation shares were trading at Rs312.50, up Rs5.36 (+1.75 percent). KSE-100 index was trading at 44,690.55 points, up 153.64 points from Friday’s close.