EnerTech Holding Company (EnerTech) is a wholly-owned subsidiary of National Technology Enterprises Company which is fully owned by the Kuwait Investment Authority, the sovereign wealth fund of Kuwait. EnerTech is the leading investor and developer in renewable energy power generation and infrastructure projects, and projects related to the environment, water treatment, petroleum and clean tech sectors to address national and regional challenges.
The business model of EnerTech and its subsidiaries is that of a technology project development company utilizing investment tools such as private equity, venture capital, project co-development and direct investment with a mission to lead both government and private sectors in the development and application of leading-edge technology; building platforms to facilitate the transfer of technology in energy, cleantech and water sectors to develop technical skills of the nation and bring innovation in high-tech; and initiating and taking a lead management role in its own greenfield projects in energy, cleantech, water, environment and renewable energy to develop the economy, create jobs and strengthen along with diversification of the national GDP.
Enertech entered into the first government-to-government public–private partnership (PPP) transaction in Pakistan and initiated a bulk water supply project for the treatment and transportation of water for the provision of 45 cusecs of water from Nabisar, Thar to Vajihar, Thar in the province of Sindh, Pakistan on a PPP basis (Water Project). The Water Project is being implemented through an SPV, EnerTech Water.
EnerTech’s Water Project possesses several unique characteristics and is ground-breaking on multiple fronts. It has been implemented on an unprecedented pace, despite the challenges faced due to the COVID-19 pandemic which halted commercial activities worldwide. The Water Project also addresses a very serious issue of sustainable management of water resources in the desert of Thar, Pakistan, having a ripple effect of providing social and economic benefits in one of the most underdeveloped and water scarce areas of Pakistan.
Enertech’s innovation flows from its structure. The Sukuk are designed as a quasi-equity instrument to finance the local equity requirement. The structure of the Sukuk was developed in order to provide investors the protection under typical financing instruments since the Sukuk facility is backed by the creation of ranking security on project assets. At the same time, the Sukuk facility was recognized as project equity under the concession agreement executed between Enertech Water and the government of Sindh (the Concession Agreement). Thus, the Sukuk facility attracts all rights, risks and benefits of local equity including the rate of return agreed for local equity under the Concession Agreement.
The Sukuk will rank subordinated to the senior financiers in the cash flow waterfall and security. Yet, the Sukuk have superior rights over foreign equity providers. The redemption tenor of the Sukuk of 25 years matches the concession period. The Shariah structure of the Sukuk is based on diminishing Musharakah under which the company and Sukukholders have agreed to jointly contribute funds for project construction as co-owners. Any return on equity during construction is capitalized; the rentals on Sukuk during construction will also be capitalized resulting in an increase of outstanding value of the Sukuk upon capitalization which a separate pool of assets has been identified under the Islamic facility documents.
The Sukuk facility also includes two embedded options as follows:
1. Put option: Sukukholders will have the right to redeem the Sukuk equal to the lower of 20% of the issue size of the Sukuk or outstanding principal under the Sukuk. The exercise right will be effective during the last month of each year beginning after the 10th anniversary of the Sukuk redemption tenor.