Saudi Arabia-based utilities developer and investor Acwa Power has reached preliminary financial closure for a $125m senior refinancing facility for its subsidiary, Rabigh Arabian Water & Electricity Company (Rawec).

The facility will be used to finance expenses and general corporate purposes, including distribution of dividends, the firm said in a bourse filing on 2 January.

It is being raised from the local bank market and has a tenor of 12.5 years maturing in 2034.

The drawdown is expected early this month.

The new facility will increase financing costs for Rawec, which owns and operates the plant that provides power, water and steam to Petro Rabigh Corporation.

“The new facility targets the optimisation of the capital structure of Rawec and monetisation of the future cashflows of the company,” Acwa Power said.

The refinancing facility supplements an $800m-equivalent senior debt facility that was drawn down on 30 December 2021.

In March 2019, Acwa Power increased its shareholding Rawec and its operations and maintenance company Rabigh Power Company (RPC). 

The firms own, operate, manage and maintain the power and desalination plant for Petro Rabigh Corporation.

The local developer at the time acquired certain shares and debt instruments and loan notes held by Japan’s Marubeni Corporation in Rawec and RPC.

The deal increased Acwa Power’s shareholding to 74 per cent after buying all of Marubeni’s stake in Rawec. It also bought 34 per cent of Marubeni’s shares in RPC.

It is understood its shareholding in Rawec has further increased to 99 per cent over the intervening period. 

The conventional thermal power plant in Rabigh is capable of producing 840MW of power, 6,110 tonnes/hour of steam and 12,000 tonnes/hour of water.

RPC is contracted for the operations and maintenance of the plant through an agreement signed with Rawec.

Rawec provides power, water and steam to Petro Rabigh Corporation, a joint venture (JV) of Saudi Aramco and Japan’s Sumitomo Chemical, under a long-term take or pay water and energy conversion agreement.