UK/French Engie (formerly GDF Suez) is discussing refinancing Omans Barka 3 and Sohar 2 independent power projects (IPPs) with banks.
A developer group led by Engie secured $1.3bn of project finance in 2010 for the two schemes, with a 15-year tenor and a debt-to-equity ratio of about 70:30.
Each project has a capacity of 744MW and both were fully commissioned in 2013. The Sohar 2 IPP cost $900m, while Barka 3 cost $800m, totalling $1.7bn. The remaining debt is thought to be more than $1bn.
The lenders were:
- Bayern LB (Germany)
- Credit Agricole CIB (France)
- Natixis (France)
- Credit Industriel et Commercial (France)
- Europe Arab Bank (UK)
- HSBC (UK)
- KfW (Germany)
- Standard Chartered (UK)
- Korea Export Import Bank (Kexim; South Korea)
On the current loan, the commercial tranche was priced at 200 basis points over the London interbank offered rate (Libor). The 25 per cent covered by Kexim was at 180 basis points over Libor. France-based Euler Hermes covered about 45 per cent of the debt, at 150 basis points over Libor.
The lack of construction risk on existing schemes, as well as several years of performance data, usually means developers can refinance more cheaply. However, with liquidity tight in Oman, the developers will have to look to international banks for attractive pricing.
Engie owned 46 per cent of the project companies, Al-Suwadi Power and Al-Batinah Power. Japans Shikoku Electric Power Company (Yonden) held 11 per cent, as did Sojitz Corporation. The local Bahwan Engineering Group owned 22 per cent and Omans Public Authority for Social Insurance (PASI) the remaining 10 per cent. These stakes were reduced when the firms listed 35 per cent of their shares on the Muscat Securities Market in 2014.
Engie is also working towards refinancing its PP11 IPP in Saudi Arabia. It secured $1.5bn of debt in 2010, in conjunction with Saudi Electricity Company, Sojitz Corporation and the local Aljomaih Holding.