The developer consortium led by Saudi Arabia’s Acwa Power has reached financial close for the 2,400MW Hassyan coal independent power project (IPP) in Dubai.

The consortium of Acwa Power and China’s Harbin International signed the 25-year power purchase agreement (PPA) with state utility Dubai Electricity & Water Authority (Dewa) on 7 June, and the developer group has now achieved financial close for the GCC’s first coal-fired power plant.

The $3.4bn project will be funded by debt of $2.5bn and equity of $650m, according to sources close to the scheme.

The majority of the debt, about 78 per cent, is being raised from Chinese Banks. Industrial and Commercial Bank of China (ICBC), China Construction Bank, Agriculture Bank of China and Bank of China are all participating in the transaction.

The remaining 22 per cent of debt will be provided by the UK’s Standard Chartered, Saudi Arabia’s National Commercial Bank (NCB), and by two UAE banks, Union National Bank (UNB) and First Gulf Bank (FGB).

The debt has been structured as a soft mini-perm, which in the absence of any refinancing post the commercial operation date will reduce the 25-year maturity of the senior debt by 3.5 years.

 The shareholders in the project are:

• Dewa (51 per cent)
• Acwa Power (27 per cent)
• Harbin International (14.6 per cent)
• Silk Road Fund (Chinese sovereign wealth fund) (7.4 per cent)

US legal firms Chadbourne & Parke and Shearman & Sterling acted as Sponsors Counsel and Leaders Counsel respectively for the transaction.