Financial close on the Hassyan independent power project (IPP) in Dubai, for which Saudi Arabia’s Acwa Power and China’s Harbin are the preferred bidders, is scheduled for mid-2016.

The $1.8bn clean coal-fired project is seeking about $1.4bn in financing, depending on pricing levels.

Lead banks UK-based Standard Chartered, Abu Dhabi’s First Gulf Bank (FGB) and Union National Bank, along with several Chinese banks, will begin putting together a syndication for the finance deal.

Due to the size of the project, the syndication will involve local, regional and international banks.

However, the unusual feedstock may complicate the process and give bankers doubts.

“This is the first coal project in the region,” says a project finance head at a regional bank. “It is a black box, and nobody knows how or when it will close.”

The bank plans to participate if the pricing and structure is right, but several others told MEED they had already ruled out the project.

About 78 per cent of the financing will be funded through debt, with the remaining 22 per cent through equity. Dubai Electricity & Water Authority (Dewa) will fund 51 per cent of the equity, which will equate to about $200m, according to its CEO and managing director Mohammed al-Tayer. Dewa will also own 51 per cent of the project company.

Al-Tayer was speaking at a press conference on 13 October to announce the selection of Acwa Power and Harbin as preferred bidder on the IPP.

The team’s resubmitted bid offered a levelised cost of energy tariff (LCOE) of 4.501 cents a kilowatt hour (kWh).

The selected consortium will develop the IPP under a build-own-operate (BOO) model, and will sign a 25-year power purchase agreement (PPA) agreement with Dewa.

EY is the financial adviser on the project.

A consortium of Acwa Power and Spain’s TSK closed financing for the 200MW second phase of the Mohammed bin Rashid al-Maktoum Solar Park on 19 July. FGB, Saudi Arabia’s National Commercial Bank and Samba Financial Group extended a $280m loan that is thought to cover 80 per cent of the project costs.

Acwa has a record of securing excellent terms on project finance deals for its IPPs.