Singapore-based Sembcorp has asked banks to respond to requests to finance Oman’s Salalah power and water project by the end of October, according to project sources.
The sponsor is looking for about $800m debt for the $1bn project after the UK’s Standard Chartered withdrew plans to underwrite the financing. The bank is now acting as financial adviser on the fundraising and running a bookbuilding exercise.
The primary source of funding is expected to be Chinese banks. Standard Chartered has been holding talks with five Chinese banks and Chinese export credit agencies. It is also holding talks with several regional institutions that have expressed interest in financing the project.
“It is a relatively informal process at the moment because of the difficulties banks are having getting internal approvals for new commitments. So there is time in the schedule to ensure banks can get commitments approved,” according to a source close to the process.
Oman Investment Corporation is co-sponsoring the project with Sembcorp, and plans to sell half of its 40 per cent equity stake in the project. Potential buyers include Omani investment funds and Bahraini-based investment fund Instrata Capital. Sembcorp will hold the remaining 60 per cent equity.
The Salalah plant will have capacity of 400MW and 15 million gallons a day (g/d) when completed.