A joint venture of Singapore’s Sembcorp Utilities and Oman Investment Corporation (OIC) signed a 15-year contract to supply Oman with power and water from the venture’s planned Salalah project.

The Sembcorp Salalah Power & Water Company will build, own and operate the $1bn Salalah independent water and power project (IWPP). Sembcorp owns 60 per cent of the company and OIC owns 40 per cent.

In turn, OIC is owned by Kuwait’s Gulf Investment Corporation, the local National Investment Funds Company, the State General Reserve Fund of the Sultanate of Oman and Bank Muscat.

The Salalah IWPP will begin operating in the first half of 2012. The gas-fired plant will have capacity of 445MW of power and 15 million gallons a day of desalinated water.

The plant will increase existing power capacity in the Dhofar region, where demand is expected to double over the next six years, from 321MW to 766MW.

Another joint venture, Sembcorp Salalah O&M Company, will operate and maintain the plant. Sembcorp will own 70 per cent.

The project will be financed using a 75:25 debt-equity split. The UK’s Standard Chartered Bank, Bank of China, China Development Bank, Germany’s KfW, and Japan’s Sumitomo Mitsui Banking Corporation will provide dollar-denominated project finance.

Bank Muscat, National Bank of Oman and Bank Sohar will lend capital to the sponsors in Omani riyals.

Bank Dhofar and Oman International Bank provided equity bridge finance to OIC.