Abu Dhabi Water & Electricity Authority (Adwea) is likely to build its next independent power project (IPP) at Mirfa, instead of Taweelah.
“The decision is subject to government approval. I think [developing a project at Mirfa] is the more likely scenario,” says a source at Adwea.
As the demand figures for Abu Dhabi are set to be released later this month, Adwea is yet to determine the size of the project.
It is also yet to decide whether the Mirfa project will be an independent water and power project (IWPP) or IPP. According to the Adwea source, it is more likely to have a desalination element “because there is existing water there and so it makes sense”.
Plans for a new facility at Taweelah have been under consideration for several years. Taweelah C IWPP was originally expected to be tendered ahead of the Shuweihat S3 IPP.
However, in January 2010, Adwea opted to tender S3 first. Bankers are currently working on funding for the project and financial close is expected for the end of April or in early May.
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.
As almost half of the funding for the project is being sourced from Japan, the earthquakes that hit the country last week have the potential to impact on the successful financing of Shuweihat S3. However, according to the Adwea source, the natural disasters will have little effect on the financing of the project. “Everything’s on track – we’re still looking to close the deal by the end of April or early May,” says the source.
“There are Japanese companies working on the project, [but] all of the messages we have received from Japan have said that everything’s on track. I don’t think that there is any panic here. We’re quite advanced on the financing – it’s just the process of setting up the project company that is time-consuming. That should happen by the end of March and financing should conclude next month.”