The
Presidents/ CEOs,
All
Banks/DFIs
Dear Sirs/Madam,
Relaxation
in Prudential Regulations for Infrastructure Project Financing
(IPF)
As
the promotion and development of infrastructure projects
is of critical importance for economic growth and employment
generation, State Bank of Pakistan is in the process of
developing appropriate regulatory framework for infrastructure
project financing, which will be instituted in due course.
To encourage private sector investment in infrastructure
sector, which are capital intensive and require heavy capital
outlay, the prescribed maximum debt equity is being relaxed
to 80:20 for the following infrastructure projects:
i. A road, including toll road,
a bridge, mass transit or a rail system;
ii. Telecommunication services,
whether basic or cellular;
iii. Generation and distribution
of power;
iv. Transmission or distribution
of power by laying a network of new transmission or distribution
lines;
v. A natural gas exploration
and distribution project, LPG extraction project;
vi. A water supply project,
irrigation project, water treatment system, sanitation and
sewerage system or solid waste management system;
vii. Dams and canals;
viii.Port, shipping, container
terminals, airport, aviation project, inland waterway or
inland port;
ix. A refinery project;
x. A pipeline project;
xi. Any other infrastructure
facility of similar nature.
2. Moreover, “Concession
Agreement/License/Right of Way” issued by Government
may be accepted as a collateral for infrastructure project
financing, in the overall collateral arrangements worked
out with the creditors, subject to the following stipulations:
i. The Right of Way is free
of encumbrances;
ii. Utilities are shifted appropriately
from the area;
iii. The Concession Agreement/License/Right
of Way is assignable to lenders in the event of default;
iv. Commercial banks/DFIs,
on the basis of studies and other data regarding volume
of expected use and future cash projections, are satisfied
regarding the secure nature of Concession Agreement/License/Right
of Way, the expected source of repayment and the overall
collateral arrangements.
Please acknowledge receipt.