Five banks were invited to participate in a pre-bid conference in late October, for what one of them described as 'just about the most interesting advisory mandate ever to have appeared in the Gulf'. There is a school of thought which says the very fact that a financial adviser is being actively sought demonstrates that one of the Gulf's most ambitious projects - and one of its most neglected - is back on track.
The point is reinforced by the heavyweight credentials of the five bidders: BNP Paribas, Citibank, Credit Suisse First Boston and HSBC Investment Bank need no introduction, and Gulf Investment Corporation has experience in the regional electricity sector and also the right shareholders.
'This is a project that has drifted in the past but it seems clear they are serious now,' says one of the bankers bidding. 'It remains a far-sighted initiative - to some extent it is going beyond where the GCC has evolved to so far - and there is no shortage of problems to be tackled, but they are getting on with it. If you need a measure of commitment, look no further than the $100 million of capital put into the GCCIA [GCC Interconnection Authority].'
The shareholder structure of the authority has been organised to reflect the projected benefits for the participants in the scheme's first phase. Saudi Arabia has a 40 per cent stake, Kuwait 34 per cent, Qatar 15 per cent and Bahrain 11 per cent. The structure is likely to change, however, as the project advances and the relative benefits are reassessed. In addition, Oman and the UAE will enter the project at the second phase, leading to a change in the authority's shareholder structure.
The financial advisory - for which bids have to be submitted by 25 November - will have two phases. The first, expected to last about six months, will cover the revision of the original financial study completed in the early 1990s. The second will involve the commercial structure and the raising of finance.
Whichever bank wins the mandate will have a mountain of work ahead of it. But the chances are improving that there will at least be an end product.
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