Saudi Arabia’s Acwa Power and its consortium partner China’s Harbin Electric are aiming for a first half financial close for Hassyan independent power project (IPP) in Dubai.

The companies are in talks with Chinese-state owned credit agency Export-Import Bank of China, Industrial and Commercial Bank of China, Bank of China, Standard Chartered, Abu Dhabi’s First Gulf Bank (FGB) and Saudi lender Samba Financial Group, Reuters has reported.

However, due to the complexity of the coal project, financial close may be delayed until the second half, or even early 2017, banking sector sources told MEED.

Acwa and Harbin agreed with client Dubai Electricity & Water Authority (Dewa) to double the size of the project from 1200MW to 2400MW, combining phases one and two. Dewa had planned to develop 3,600MW of coal-fired generation capacity over three phases.

The project consortium then had to renegotiate the project finance deal with the Chinese banks, increasing the original $1.4bn loan size. The new loan size has not been set, but is thought to be over $2bn.

Chinese banks are liquid and have a strong appetite for the project. However, they are unfamiliar with the region, meaning due diligence may take some time.

Technical due diligence will also be longer than usual due to the clean coal technology proposed, according to banking sources.

Under the original plan, an $1.8bn, 1200MW plant will be delivered in two phases, with the first 600MW coming online in March 2020 and the remainder to be commissioned in March 2021. 

Dewa agreed to contribute $200m in equity and hold 51 percent share in the project company, with Acwa and Harbin putting forward another $200m in equity. The debt to equity ratio was 78:22. 

The new equity arrangement has not been disclosed.

Saudi Arabia’s Acwa Power has also signed a memorandum of understanding (MOU) with China’s state-owned investment fund Silk Road Fund to partner for some of the largest projects in the Middle East and North Africa power market.

Under the terms of the MOU, the two parties will cooperate on planned projects such as the Hassyan IPP and the Dairut combined-cycle IPP in Egypt. For these and other future projects, Acwa will develop the projects, and the Silk Road Fund will make equity investments in the projects and provide debt financing.

China’s Harbin will build the plant in partnership with France’s Alstom. The French power firm will lead the engineering, procurement and construction (EPC) consortium, and will be in charge of the overall engineering of the plant. Netherland’s based Louis Dreyfus will build the coal handling facilities and France’s EDF will supply coal for the plant.