Biggest project finance deal marks new financing model for Jordan

13 November 2007
Financing for the $700 m Queen Alia airport expansion, Jordan’s biggest project finance deal, marks the beginning of the government adopting commercial project finance techniques for future infrastructure deals in the country, according to a World Bank official.

The Queen Alia airport expansion financing is due to be signed on 14 November by a consortium of international banks. The International Finance Corporation (IFC), a division of the World Bank Group, advised the Jordanian government on structuring the deal to appeal to international investors. Key among the issues that IFC and the government had to resolve was the kind of assurances given to banks about political risk, compensation, and arbitration if there are problems with the project.

Towfique Haque, investment officer for the IFC, tells MEED: “This deal marks the breaking away of Jordan’s old way of doing deals, and going forward the government will adopt a similar financing structure to this one involving private sector financing for infrastructure development.”

Among these is likely to be the $300 m independent power project (IPP) near Almanakher, east of Amman which is currently yet to reach financial close.

In additional to advising the government, IFC also supplied $120 m of financing, while Ernst & Young advised Airport Investment Group (AIG), the consortium which won the expansion contract. The rehabilitation of the airport is seen by the government as crucial for the development of the landlocked country, and Haque says the country’s poor infrastructure is a major impediment to Jordan’s economic growth.

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