Kuwait National Petroleum Company (KNPC) is expected to close a KD3bn ($9.9bn) financing package for its Clean Fuels Project (CFP) in late 2015 or early 2016.

Banks are currently bidding for the role of initial mandated lead arrangers, who will lead the syndicate and underwrite a sizeable part of the loan.

KNPC will directly put up KD1bn to make up the 25 per cent equity stake. The remaining 75 per cent of the cost of the project will be financed by debt.

Due to the size of the project, the majority of the financing will come from international banks. However, all Kuwaiti banks will be invited to participate in the syndication, including Islamic banks.

Although the structure has not yet been finalised, there are expected to be Kuwaiti dinar and US dollar tranches. There will also be direct and export credit tranches. The loans will have a term of seven to 10 years.

“As a Kuwaiti bank we will definitely take part,” says a source at a local lender. “We are very keen on both the dinar and the dollar tranches.”

The financial adviser is the local NBK Capital, which did not respond to a request for comment.

The CFP will upgrade and expand Kuwait’s Mina al-Ahmadi and Mina Abdullah refineries, and saw three packages worth a total of $12bn awarded over 2014.

The scheme was first announced in 2007, and in February 2008, KNPC awarded technology contracts to several international firms, including US engineering and technical services company Chevron Lummus. Orders for 37 reactors and vessels were placed, but the project stalled in 2009.

Kuwait’s Supreme Petroleum Council reviewed the project in 2010 and the plans were finally approved in June 2011.

Construction of permanent structures is expected to start in July 2015. The financing is expected to facilitate KNPC’s payments to contractors.

A similar $1.2bn project finance package in the 1990s for the $2bn Equate petrochemicals project in Shuaiba was not signed until more than a year after construction began.