Engro Sri Lanka LNG Project
Project Brief
The Government of Sri Lanka invited private investments to develop infrastructure for the supply of LNG
to power plants, with an aim to generate cleaner electricity. Engro Corp and China Harbor Engineering
Company (CHEC) submitted combined tenders for two projects which include:
o
o
a LNG terminal which includes setting up of Floating Storage and Regasification Unit (FSRU)
and a Mooring system 5 kilometers offshore,
a pipeline project which would transport LNG from the terminal to different powerplants.
Project Structure
The project companies will be incorporated in Sri Lanka and their ownership structure between Engro and
CHEC would be 40% and 60% respectively. The terminal project is expected to be on BOO basis while the
pipeline project is expected to be on BOOT basis. Concession period for both projects is 10 years, which
is extendable by an additional 5 years.
Project Funding
The total project cost of both projects combined is approximately USD 239 million, which is expected to
be financed via a Debt:Equity ratio of 60:40. The project is expected to achieve financial close by August
2022, and COD is planned for February 2024.
Engro’s equity funding requirements are as follows:
Equity (including USD 7 Mn for debt servicing)
10% Cost Over run
Performance Security to CEB
Credit Support to FRSU Supplier
Credit Support to tugs provider
Total Amount
USD (Mn)
45.4
9.6
8.0
5.3
2.6
70.9
Timeline
Aug'22
Aug'22
Nov'21
June’24
June’24
Engro has reached out to HBL for assistance with injecting its portion of equity and obtaining all regulatory
approvals, including that of SBP. Different structures have been explored for the equity injection, including
issuance of an SBLC by HBL, based on which Engro can arrange funding from international lenders.
Way Forward
Work streams have been setup to prepare a proposal for the SBP approval, seek out international funding
and analyze the Sri Lankan market from a risk participation perspective.
Engro is in the process of firming up some important aspects of the proposal including the required tenor
of the SBLC and the exact amount of funding required with timelines (considering some funding is required
in Nov’21, which is too early and the SBLC structure might not be finalized by that time).
Pursuant to this, HBL will carry out the due diligence procedures and scan the local market for potential
participants for a syndicated SBLC facility based on the local banks’ per party/group limits as per SBP
Prudential Guidelines.