Arzew financing to close in Q2

21 March 2003
Kahrama, the owner and developing consortium for the country's first independent water and power project (IWPP), expects to reach financial close for the Arzew project by the end of April. A Japanese consortium of Itochu Corporationand Ishikawajima-Harima Heavy Industrieswas awarded the $260 million engineering, procurement and construction (EPC) contract for the 88,000-cubic-metre-a-day, 314-MW plant at the start of last year (MEED 1:2:02).

Total project costs for the IWPP, to be built at the oil terminal town of Arzew, are put at $400 million, of which $120 million will be in the form of shareholders' equity. The remaining $280 million will be raised through debt financing that will be covered by the French export credit agency Coface. The debt tranche, which is being co-ordinated by ABN Amro, is expected to include financing from French development finance institution Proparco, Washington-based Overseas Private Investment Corporation (OPIC) and Saudi-based Arab Petroleum Investments Corporation (Apicorp). Mizuho Financial Groupis advising Kahrama, an 80:20 joint venture between the US' Black & Veatch (B&V) and Algerian Energy Company (AEC), on the financing (MEED 1:11:02).

Kahrama is also close to awarding the operations and maintenance (O&M) contract for the plant. Once the deal is signed, the O&M company is expected to take a 10 per cent equity stake in the Arzew IWPP, reducing B&V's stake in the plant to 70 per cent (MEED 28:6:02).

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