Banks line up for Umm al-Nar

16 August 2002

Strong groups of banks have formed behind the three expected bidders for Abu Dhabi's Umm al-Nar independent water and power project (IWPP), on which the 22 September bid deadline is drawing closer.

Lining up behind the anticipated bid from Belgium's Tractebeland Italy's Enelpower are Barclays Capital, BNP Paribas, Credit Agricole Indosuezand Societe Generale.

The UK's International Power, with Japan's Mitsui & Companyand Tokyo Electric Power Company, are backed by ANZ Investment Bank, Bank of Tokyo-Mitsubishi, ING, Sumitomo Mitsui Banking Corporationand WestLB.

The third likely bid, spearheaded by TotalFinaElf, is understood to be supported by ABN AMRO, Citibank, Credit Lyonnais, Royal Bank of Scotlandand Mizuho Financial Group.

Developers will bid for the project on the basis of taking a 40 per cent stake in a new project company, which will purchase 70 million gallons a day (g/d) of recently installed capacity. It will also be responsible for installing 1,500 MW of new generating capacity and up to 25 million g/d of new desalination capacity (MEED 28:6:02, Power & Water).

The pricing and tenor of the proposed project finance is already provoking debate, with some bankers warning of only limited appetite for finely priced, long-tenor transactions. 'The comfort that comes with the familiarity of an IWPP in Abu Dhabi is more than counteracted by the difficulties some regional institutions are having with tenor mismatches and the signs of declining international interest in using their balance sheets in aggressively priced deals,' says an international banker interested in the deal.

The most recent IWPP in Abu Dhabi, the Shuweihat project, had the misfortune of being launched to syndication in the immediate aftermath of the 11 September terrorist attacks on New York and Washington. There was some turbulence during the sub-underwriting and syndication phases - a $250 million Islamically structured tranche was added - before the $1,600 million loan financing was signed last December (MEED 14:12:01).

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