SSGC wins Rs4bn financing facility

Posted on 11.09.06 by StockPK Team @ 3:06 pm    

The Sui Southern Gas Company (SSGC) on Wednesday signed Rs4 billion financing facility with a consortium of banks led by National Bank of Pakistan (NBP) to fund its ongoing ambitious expansion project.

The Managing Director of SSGC, Munawar Baseer Ahmad, Naveed Khan of ABN-AMRO, Badar Kazmi of Standards Chartered Bank, and Badar Mannan of Dubai Islamic Bank inked the financial deal at SSGC head office in the presence of State Bank Governor Dr Shamshad Akhtar.

NBP, ABN-AMRO, Standard Chartered Bank, Bank Al-Flah and Dubai Islamic Bank are the members of the consortium, which will provide Rs4 billion to SSGC including Rs1 billion sukuk bond for a period of five years with the same rate of return (KIBOR plus the undisclosed spread).

Speaking on the occasion, Dr Shamshad termed the deal as a landmark transaction in the financial history of Pakistan and said that this “blend” of conventional and Islamic banking will go a long way in the development of Islamic banking in the country. “These two separate tranches - Islamic banking, conventional banking with same assets and same tenor will provide a blend of products for corporate customers. This transaction is innovative as well as much in line with SBP’s approach”, she added.

SBP governor appreciated SSGC for securing this innovative deal and hoped that other corporate clients will also consider products of Islamic banking for their financing needs.

She also lauded SSGC for not borrowing from the Government of Pakistan and raising funds from banking sources. She pointed out that the Central Bank was developing a ten-year development strategy for the growth of Islamic banking in the country.

She said that Islamic banking has great future and it will grow very fast in Pakistan. It has grown faster in the last few years with six-fold jump in advances, which is 2.2 per cent of deposit, lending and asset base.

Dr Shamshad said that Rs8 billion WAPDA sukuk was also a landmark instrument in Islamic banking. SBP has issued several licenses for Islamic banking in the country, four of these banks are operational while two will be operative soon. The total branches of Islamic banks have so far risen to 110 in the country, she noted.

Earlier, Masood Karim of NBP said that corporate sector has to go to the debt market for raising long term financing as banks were turning their priorities to small and medium enterprises (SMEs).

The MD of SSGC said that the financing will be used to fund Rs10 billion expansion project to raise company’s gas supply to 1800 million cubic feet per day (mmcfd) by 2008. He said currently SSGC was supplying 1400 mmcfd to its 1.9million customers. More than 200 mmcfd will be added to this network by the end of 2007 from Zamzama and Bhit sources.

Source: The News