Neelum Jhelum project: banks provide Rs 100 billion #Shariah-compliant #financing

Neelum Jhelum Hydropower Company (Pvt) Limited has entered into a financing agreement amounting to Rs 100 bn with a consortium of 16 banks led by National Bank of Pakistan for raising funds through one of the largest Shariah-compliant facility. The financing is based on Diminishing Musharika structured by NBP Aitemaad. The Sukuk is structured with a tenor of 10 years and is backed by the sovereign guarantee from Government of Pakistan.

NJHPC mandated National Bank of Pakistan to act as Mandated Lead Arranger for arrangement of up to Rs 100 billion through issuance of rated, secured and privately placed Sukuks to partially finance the construction of strategically important 969 MW hydel power project located in District Muzaffarabad, Azad Jammu & Kashmir. For this financing, a signing ceremony was held on Wednesday here and attended by President & CEO NBP Syed Iqbal Ashraf, Chairman Wapda Zafar Mahmood, member finance Wapda Anwaar ul Haq, CEO NJHPCL Lieutenant General Muhammad Zubair and other presidents and senior officials of all the 16 participating financial institutions.

National Bank has a share of Rs 35 billion in Pakistan's largest Islamic finance transaction of Rs 100 billion, while remaining Rs 65 billion has been managed by other 15 banks including Meezan Bank Limited, United Bank Limited, Habib Bank Limited, Askari Bank Limited, Bank Al Habib Limited , BankIslami Pakistan, Dubai Islamic Bank, Faysal Bank, The Bank of Punjab, The Bank of Khyber, Allied Bank Limited, Al-Baraka Bank (Pakistan) Limited, Soneri Bank Limited, Pak Brunei Investment Company and Pak China Investment Company.

Addressing the ceremony, Iqbal Ashraf, President NBP said that this Sukuk has received a preliminary rating of "AAA" from JCR-VIS and is expected to have a wider impact on financial market of Pakistan, helping augment a funding format that has been predominantly constrained to smaller deals with shorter tenors. This Sukuk will also provide avenues for Islamic Banks and Mutual Funds to invest their liquid funds in a tradable GoP guaranteed Islamic instrument, he added. He said the Neelum Jhelum project - a hydropower generation facility is a milestone in the country's history and will help resolve the energy crisis in the country.
President NBP said that it is a mega hydropower project undertaken in the country since the completion of Mangla and Tarbela Dam projects. On completion, it is designed to generate 5.15 billion units of electricity annually. He said that it is an honour for NBP that it provided such facility for a national project that will cater for the energy demand in the country.