Facility D consortium seeks financing

25 May 2015

Winning developer in negotiations

  • Consortium led by Japan’s Mitsubishi Corporation is negotiating financing for Facility D power and water project in Qatar
  • Consortium will take 30 per cent stake in project, and Qatar Electricity & Water Company will own 60 per cent
  • Facility D is expected to require investment of about $3bn

K1 Energy, a consortium led by Japan’s Mitsubishi Corporation, is seeking project financing for the Facility D independent water and power project (IWPP).

It is in negotiations with financiers and expects to reach financial close within a year.

Facility D is expected to require an investment of about $3bn.

The development consortium has signed a contract with Qatar General Electricity & Water Corporation (Kahramaa) to develop the IWPP.

K1 Energy is a joint venture established by Mitsubishi and Japan’s Tokyo Electric Power Company (Tepco). Mitsubishi holds a 98.5 per cent equity share. Tepco currently holds a 1.5 per cent share, but is in negotiations to increase this to a maximum of 33.3 per cent by the middle of 2015.

The developer will hold 30 per cent of the equity in a special-purpose vehicle (SPV) which will be formed to build, own and operate the IWPP. Qatar Electricity & Water Company (QEWC) will hold 60 per cent, with Qatar Petroleum and the Qatar Foundation holding 5 per cent each.

Kahramaa will be the offtaker, after it signs a 25-year power and water purchase agreement (PWPA) with the SPV.

The IWPP, which is also known as Umm al-Houl, will have a capacity of 2,500MW and 590,000 cubic metres a day of desalinated water.

A significant proportion of the investment for the project is likely to be debt-financed by banks. It is thought that government-backed export credit agencies such as Japan Bank for International Cooperation (Jbic), will have to play a role in raising the necessary financing.

MEED reported in 2013 that Jbic was considering participating in the financing, but that the 30 per cent Japanese ownership of the project was below its official threshold for funding.

Jbic agreed to finance its first IWPP in Qatar in 2008. A consortium led by Japan’s Mitsui secured a $1.5bn loan from Jbic and other Japanese and local financial institutions for the 2,730MW Ras Laffan C project.

Jbic could not be reached for comment.

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