Bahrain IWPP to move ahead with refinancing

07 December 2016

Arbitration on project resolved

Developers of Bahrain’s Al-Durr independent water and power project (IWPP) are expected to move ahead with refinancing in early 2017.

An arbitration case around the project has now been resolved, according to industry sources.

The complex dispute was primarily regarding the quality of water treated at the plant, one source added. It involved both the offtaker, the Electricity & Water Authority (EWA), and an engineering, procurement and construction (EPC) contractor.

Lead developer France’s Engie declined to comment.

Engie, along with 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.

MEED reported in September that the developers were seeking extensions from lenders on the debt.

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.

EWA is awarding the advisory contract for Al-Durr 2 IWPP to a consortium of Netherlands-based KPMG, the UK’s Trowers & Hamlin and Canada’s WSP PB. The structure could be adjusted to avoid similar disputes on the new project.

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