Hamma desal finance sealed

08 July 2005
Financing for the landmark 200,000-cubic-metre-a-day (cm/d) Hamma desalination plant was completed on 25 June. Three-quarters of the total will come from a $200 million loan from the US' Overseas Private Investment Corporation (OPIC) .The remainder will be provided in equity from the shareholders in the project company, Hamma Water Desalination (HWD), in which Ionics, now part of the US' General Electric (GE), holds 70 per cent and the client, Algerian Energy Company (AEC), 30 per cent.

The OPIC loan will have a tenor of 18 years, including a grace period of just under three years to cover construction and early operations, and a market-rated margin based on US treasuries.

Ionics will supply equipment and technology for the reverse osmosis (RO) plant. A joint venture of Egypt's Orascom Construction Industries (OCI)and Belgium's Besix received a letter of intent (LoI) from HWD in April for the 24-month construction contract. Work is due to begin in July, but is expected to be delayed until later in the summer following the first disbursement of OPIC funds (MEED 15:4:05).

A decision on the long-awaited $220 million limited recourse financing of the Arzew independent water and power project (IWPP) is expected to be delayed until after the plant becomes fully operational in November.

Once the 300-MW, 88,000-cm/d plant is up and running, an element of risk will be removed, making it possible for the project company, Kahrama, to agree more favourable financial terms. Project costs in the interim will be covered by shareholder financing.

An agreement on the debt package is understood to have been delayed in part due to the focus on arranging the financing for the Hamma plant. The project company is 95 per cent owned by AEC and 5 per cent by the US' Black & Veatch (MEED 13:5:05; 15:4:05).

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