JBIC to feature in Middle East water deals
- From: Vol 6, Issue 1 (January 2005)
- Category: General
- Region: Middle East
- Country: United Arab Emirates
- Related Companies: ACWA Power, Al Bugshan, ANZ Investment Bank, Black & Veatch, BNP Paribas, BTU Power, Degrémont (Suez), Doosan Heavy Industries, Hitachi Zosen, Hyundai Heavy Industries, International Power, JGC Corporation, KfW, Mada, Malakoff, Marubeni, Mitsui & Co., Powertek Bhd, Saudi Oger, Siemens, Sumitomo, Tractebel and Xenel
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Export credit finance will be an important factor in two of the region’s biggest IWPPs.
The Japan Bank for International Cooperation (JBIC) looks set to step up its lending activities in the Middle East power and water market. It will feature prominently in Abu Dhabi’s Taweelah B IWPP, which made good progress last month, and could also play a part in Saudi Arabia’s Shoaiba IWPP.
Industry sources feel that both projects will put a huge strain on commercial lenders and will require a significant chunk of export credit funds. The Shoaiba project has a price tag of $1.6 billion and the project developer will have to tap the debt market for about $1.2 billion.
Taweelah B is an even bigger project. It involves buying an existing facility that produces 1,000MW of power and 90MIGD of water and its expansion to contracted capacities of 2,000MW and 160MIGD.
The winning bid valued the existing assets at $1.69 billion (see GWI, August 2004, pp8-9). However, total project costs are estimated to be about $3 billion, with the debt portion amounting to about $2.2 billion. About 60% of the debt is set to be provided by JBIC, the rest coming from a mix of international and regional commercial lenders. The lead arranging banks are BNP Paribas, ANZ Investment Bank and KfW.
Taweelah B took a big step forward last month when UAE president H.H. Sheikh Khalifa bin Zayed Al Nahyan issued two emiri decrees establishing new firms for the project.
Al Taweelah United Power will be wholly owned by the Abu Dhabi Water & Electricity Authority (ADWEA) and take a 60% share in the project.
A project company, Taweelah Asia Power Company (TAPC), will develop, own, operate and maintain the assets. TAPC’s other shareholder will be Asia-Gulf Power Holding Company, which will take the other 40% stake in the project. Asia-Gulf Power is owned by the first-ranked bidding consortium comprising Marubeni, BTU Power, JGC Corporation and Powertek Berhad.
Meanwhile, Saudi Arabia’s Water & Electricity Company (WEC) confirmed that the bid deadline for the Shoaiba project has been moved. The new date, according to WEC president Omar Al Ghamdi, is 5 March.
There are three bidding groups for Shoaiba: an International Power consortium including Saudi Oger, Xenel, Mitsui & Co and Sumitomo Corporation; a pairing of Tractebel with the Saudi trading house Al Bugshan, and; a group of ACWA Power, Black & Veatch International Company, Mada Company for Industrial & Commercial Investment, Tenaga Nasional Berhad and Malakoff.
The ACWA Power group has signed up a team of Doosan Heavy Industries and Siemens as its EPC contractor. IP will use Mitsui, Hyundai Heavy Industries and Hitachi Zosen. Tractebel is believed to be contemplating a bid based on RO and thermal distillation in a hybrid configuration, in which case it will use Degrémont as one of its EPC contractors.
IP’s view is that a project the size of Shoaiba will require export credit finance, and its consortium has lined up JBIC as a financial backer.
A potential drawback with export credit financing is the long lead time it can require (it often takes considerably longer to arrange than commercial financing). This should not cause a problem for Shoaiba, which has a long timeline, but it could present a problem for Taweelah B, where the period between signature of a PWPA and financial close is only 10-12 weeks.