The second phase of Dubai’s Mohammed bin Rashid al-Maktoum solar park is expected to reach financial close by mid-April.

Abu Dhabi’s First Gulf Bank and Saudi Arabia’s National Commercial Bank are currently arranging a debt facility of US$280m to finance the construction costs of the 200MW independent power project (IPP), a source tells MEED.

It is possible the final lending group could include at least one more bank. The average margins on the facility are said to be 170 basis points, covering a tenor of 25 years.

The total project financing package is expected to have an equity portion of $60m, with the debt portion accounting for 83 per cent of the total package.

A consortium led by Saudi Arabian power company, Acwa Power, and including the Spanish engineering and construction company TSK as technology provider, has been selected by Dubai Electricity & Water Authority (Dewa) as the preferred bidder to develop, construct, own and operate the IPP project.

Acwa will receive a tariff of 5.84 US cents per kWh for a 25-year power purchase agreement (PPA) starting in 2017. Dewa has a 51 per cent equity stake in the project and the developer will take 49 per cent.

The tender for the construction of phase two of the park was launched in early 2014 using a build-own-operate (BOO) model. Bids from 10 groups were opened on 20 November.

The 200MW phase will be the largest photovoltaic (PV) solar plant in the region when completed, which will also mean Dubai will achieve its intended target of 1 per cent of its power generation coming from solar.

Dewa is also developing the Hassyan coal-fired power project. However this IPP is progressing at a slower pace that the solar project.

MEED reported in December that the bid submission date for the project has been extended until March 2015.

Follow Rebecca Spong on Twitter: @Rebecca_MEED