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Pakistan Textile City gets approval for an additional Rs 1bn credit line from NBP

YarnsandFibers News Bureau 2014-10-22 10:00:00 – Karachi

Pakistan Textile City can avail another Rs 1.16 billion financing from National Bank of Pakistan (NBP) to meet its financial needs, as NBP has increased the credit line against sovereign guarantee. With this approval, overall credit line for Textile City reached Rs 3.16 billion compared to Rs 2 billion previously.

In 2008, a credit line of Rs 2 billion was provided to Textile City but the entire amount has already been consumed during the last couple of years on account of development and operational expenses.

As the Textile City management is preparing to launch the much-awaited project, it requires more funds to complete the already initiated infrastructure development schemes. Last year, the Economic Co-ordination Committee (ECC) of the Cabinet approved a sovereign guarantee amounting to Rs 1 billion for Textile City and accordingly NBP agreed to provide an additional credit line of Rs 1.165 billion.

According to Sources, in September 2014, Textile City formally received a letter of acceptance/approval from NBP intimating increase in credit limit against sovereign guarantee. The enhanced credit line will be utilized for payment of mark-up, utility and infrastructure development. After getting additional credit line, first payment of Rs 11 million has been made to K-Electric as an installment against electricity connection.

A sum of Rs 400 million has been allocated for payment of mark-up and a payment of Rs 127 million will be made to Sui Southern Gas Company, which is likely to approve gas supply of 9mmcfd for the project. Textile City has also planned to make a partial payment of around Rs 10 million to NESPAK against outstanding amount of Rs 40 million, while some Rs 20 million will be paid to Port Qasim Authority for land.

Textile City has signed an agreement with K-Electric for supply of 50MW electricity; initially one MW supply has been started to the project. A proposal of 600 MW coal power project in the Textile City is also under consideration to ensure cheaper power, steam and hot water to the value added textile industries in Textile City zone.

A meeting of the infrastructure committee to be held on October 23 (Thursday) to review the development work. The total cost of this project is estimated at Rs 13 billion and the management has spent Rs 159 million on water project, Rs 175 million on roads and Rs 500 million on land leveling. The federal government is majority shareholder in the project with 40 percent holding, while Sindh government's share stands at 16 percent and National Bank of Pakistan (NBP) and Port Qasim 8 percent each. In addition, other seven institutions including Pak-Oman Investment Company, Saudi-Pak Investment Company, Pak-Kuwait Investment Company, Pak-Libya Investment Company, PIDC, EPZ and NIB Bank have 28 percent holding.

Initially, NBP was insisting appointment of a financial consultant/advisor to monitor the financial issues of the project, however later on the request of ministry of textile, the bank waived this condition. However, the management of Textile City will provide/submit the financial report regularly to the lender, sources added.

Under the revised business plan, the Board of Directors of Textile City has decided to launch this mega project in next two months.

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