Degrémont confirms Samra expansion

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The French company has put pen to paper on the expansion of Jordan’s largest WWTP after nearly three years of negotiation. Improved borrowing conditions allowed it to refinance the project’s existing debts at the same time.

Degrémont has been given the go ahead for a major overhaul to Jordan’s main wastewater treatment plant, after agreeing a funding deal that brings together a host of local bank lenders with a tranche of US-backed government support.

The As Samra plant, outside of the capital Amman, will serve in the region of 3.5 million people – more than a third of the country – after Degrémont and its partner Morganti complete the 98,000m3/d expansion that will take the total capacity up to 365,000m3/d.

As one of the world’s most arid countries, Jordan is faced with a pressing need to expand its water recycling facilities, but has been hampered by a lack of available domestic funding and political pressure to keep water and wastewater tariffs low.

Degrémont and Morganti – which are equal partners in the Samra Project Company (SPC) vehicle that runs the existing plant under a 25-year BOT agreement signed in 2002 – together took on the EPC work for the upgrade in exchange for an expansion and extension of the BOT contract that ties Jordan’s Ministry of Water and Irrigation (MWI) into payments for wastewater treatment until 2037.

The €150 million cost of the upgrade will be partly covered by a €75 million grant from the US-backed Millennium Challenge Corporation, through a vehicle owned by the Jordanian government. The project company also contributed a total of €15 million of fresh equity towards the cost of the work.

The remainder of the funding for the expansion was covered by a JOD100 million ($141 million) 20-year loan from a nine-bank local consortium, led by Arab Bank. The other banks involved were Jordan Kuwait Bank, Capital Bank, Société Générale de Banque – Jordanie, Investbank, Social Security Investment Fund, Bank of Jordan, Arab Jordan Investment Bank and Bank al Etihad.

Frédéric Claux, the head of BOT projects at Degrémont, told GWI the attractive pricing currently available in the commercial debt market in Jordan meant SPC took the opportunity both to cover the remainder of the expansion EPC costs and refinance the debt taken on by the company for the first construction phase at As Samra. Loan repayments are fixed at 8% over the three-year construction period, and will track the local prime rate – currently just over 8% – for the majority of the 22-year operating period.

He added the combination of aid funding allied with commercial debt meant that Jordan was able to significantly upgrade its wastewater treatment capacity without putting too heavy a burden on tariff levels – a thorny political issue in Jordan.

“It’s a typical BOT structure in most ways,” he said. “The only special thing is this grant coming from the MCC, which makes the final tariff much lower and therefore more attractive to the Ministry and the population of Jordan as a whole.

“We had to marry the commercial approach from us and the banks with the approach of the MCC and the MWI. Their worry was to make the tariff affordable. Sometimes it’s difficult to have the best technology in the world and at the same time a tariff that is affordable to the local population. So this was the main challenge we faced in our negotiations.”

The first stage of the As Samra plant came online in 2008. It returns treated sewage effluent to the MWI on a noncommercial basis via the King Talal Dam and reservoir, where it is reused for irrigation. The expansion of the plant will also see the installation of a mechanical sludge dewatering facility, with a sludge disposal site expected to be identified by the Jordanian government by 2018. The facility will also cover some 80% of its energy needs through on-site biogas generation.