Abu Dhabi Water and Electricity Authority (Adwea) has been forced to arrange a one month extension of its bridge loan to finance the development of the Shuweihat 2 power and water project.

The maturity of the $900m bridge loan has now been extended from the end of September to the end of October as a result of failing to arrange a $1.1bn long term commercial bank loan before the bridge expires.

According to bankers the deal has been held up by Ramadan and the Eid holiday. “It is just an issue of documentation not being cleared before the bridge loan maturity date,” says one UAE based project banker close to the deal. “The financing should now be signed in mid-October,” he adds.

Adwea and the banks had hoped the 22-year long term financing would be in place before the end of September (MEED 15:9:09).

The $3.2bn project is already under construction after the $900m bridge loan was put in place in early 2008, with the remainder of the funding coming from a $1.1bn loan from Japan Bank for International Cooperation, the $1.1bn long term funding, and equity finance.

Bankers expect that the deal will go ahead despite the lenders failing to get Adwea to increase the margin it was offering banks on the project from 260 basis points above the London interbank offered rate (libor).

Banks working on the 22 year financing are the UK’s HSBC and Standard Chartered, National Bank of Abu Dhabi, Saudi Arabia’s Samba, France’s Natixis, BNP Paribas and Societe Generale, Germany’s KfW and Bayern LB, Japan’s Bank of Tokyo Mitsubishi, Mizuho, Sumitomo Mitsui Banking Corporation, and the Sumitomo Trust.