Abu Dhabi’s executive council has signed project agreements for the Shuweihat S3 power project.

The agreements, which were signed on 15 February, include a 25-year power purchase agreement for the emirate’s first independent power project (IPP). According to a senior source at Abu Dhabi Water & Electricity Authority (Adwea), verbal approval has been issued for the project.

A Japanese/South Korean consortium of Sumitomo and Korea Electric Power Company (Kepco) was selected by Adwea to build the project in October 2010.

Debt funding for the project will be roughly split between a $370m Japan Bank for International Cooperation (JBIC) loan; $370m from Export-Import Bank of Korea through a direct loan and loan insurance; and a $360m commercial bank tranche.

When the Sumitomo consortium was selected to build the project, the bid had financial backing from France’s BNP Paribas and Japan’s Mizuho. The following banks have joined the original backers and will lend as part of the commercial tranche:

• HSBC (UK)
• National Bank of Abu Dhabi (UAE)
• Bank of Tokyo-Mitsubishi (Japan)
• Sumitomo Bank (Japan)
• Samba (Saudi Arabia)

One banker involved in the deal says “pricing is very aggressive”. Shuweihat S3 will be a 1,600MW project and is due to come online in mid-2013. The plant will not have a desalination component, unlike Adwea’s previous projects.