The UAE’s Emirates NBD and UK-based HSBC have offered to provide up to $200m to help finance Dubai’s first independent power project (IPP) in an offer intended to demonstrate confidence in the project.
HSBC is also advising Dubai Electricity & Water Authority (Dewa) on the IPP, while Emirates NBD is owned by the government of Dubai.
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According to one prequalified bidder, the offer from the banks is a positive move. “I think that this is a good thing. It’s a good sign,” says the developer. “But it’s not necessarily the best or the cheapest option for the project.”
“The pricing is going to be driven by the bidders’ own pricing,” says a source close to the project. “[HSBC and Emirates NBD] will match pricing from the other banks.”
Bids from the developers are due by 12 December following a bid deadline extension (MEED 22:9:11). “I think that the deadline extension will help,” explains the project source. “That was mainly to give the export credit agencies more time to do their due diligence on the project, which they requested because this is the first IPP in Dubai.”
The timing of the lending offer with the bid deadline extension is also beneficial according to the source. “The bidders have a couple more months to submit their bids and they have enough time to build this into their financing plans. They will be able to take [the offer from HSBC and Emirates NBD] to their export credit agencies and demonstrate the support.”
The Hassyan 1 project will be constructed on a build-own-operate (BOO) basis and will use natural gas/distillate fuel. The project is expected to be commissioned in 2014. Dewa will buy all the power produced by the project.
The developer will be responsible for the development, financing, design engineering, procurement, construction, commissioning, operation and maintenance of the power plant and associated facilities, as well as fuel.
Hassyan 1 IPP is expected to be followed by several more phases at the site. Once the planned phases are complete, the Hassyan complex will have a capacity of 9,000MW of power and 720 million gallons a day of desalinated water. The complex will include up to six plants.