The developers of the Al-Durr 1 independent power & water project (IWPP) in Bahrain are discussing a loan extension with their banking group, according to finance sources.

The extension would allow them to delay refinancing until 2018.

France’s Engie, formerly GDF Suez, and its partners, Kuwait’s Gulf Investment Corporation, and local Social Insurance Organisation of Bahrain, Capital Management House, Bahrain Islamic Bank, First Energy Bank, Bunyah Infrastructure Fund (managed by Dubai’s Arqaam Capital) secured a $1.6bn project finance deal in 2009.

The eight-year hard miniperm matures early in 2017. Under this structure, the balloon, around 80 per cent of the value of the loan, must be paid off on maturity.

The developers are also discussing a longer-term refinancing, but have not agreed pricing with lenders, one source added. Pricing for greenfield projects was very competitive in 2009, but liquidity has tightened in the GCC, and the cost of borrowing has risen in the last year.

The original mandated lead arrangers were France’s Calyon, Dubai-based Mashreq, and the UK’s Standard Chartered.

Twenty banks participated in the syndication, including Al Rajhi Bank (Saudi Arabia), Arab Bank (Jordan), Arab National Bank (Saudi Arabia), Banque Saudi Fransi, BayernLB (Germany), Credit Industriel et Commercial (France), Dexia Credit Local (Belgium), Export Development Canada, Fortis Bank (Belgium), HSBC, KBC Bank (Belgium), KfW Ipex Bank, National Australia Bank, Societe Generale, Bank of Tokyo Mitsubishi, Islamic Bank of Asia (Singapore) and WestLB (Germany).

The $2.2bn IWPP has a capacity of 1234MW and 181,700 cubic metres a day of water. It was fully commissioned in 2012, and has a 20 year power and water purchase agreement.

Bahrain’s Electricity & Water Authority is now moving ahead with al-Durr 2 IWPP, which is expected to have a generation capacity of 1,500MW.