Jordan wastewater treatment expansion in financing

27 January 2011

Project will increase capacity by 100,000 cubic metres a day

Financing for a project that will expand the capacity of Jordan’s Al Samra wastewater treatment facility is set to close in the first half of 2011.

The scheme will expand the capacity of the project from 267,000 cubic metres a day (cm/d) to 367,000 cm/d.

According to a source close to the deal, the project’s sponsors, France’s Degremont and US-based Morganti Group, have approached the banks and intend to conclude negotiations over the next few months.

The $150m expansion project is likely to be financed with $20m in equity from the sponsors, $60m in a grant from the Millennium Challenge Corporation, a US government organisation, and $70m in bank debt.

The deal will follow a similar structure to that used for the original build-own-transfer project. The initial project, Khirbert al-Samra wastewater plant, was tendered in 1999. Five consortiums came forward for consideration before Degremont, a subsidiary of Suez Environnement, and Morganti were selected in July 2002.

The $170m project costs were covered by a $78m grant from USAID, $14m grant from the Ministry of Water and Irrigation of Jordan, $17.5m in equity and $60m equivalent syndicated loan in Jordanian Dinars. The commercial bank tranche was led by Arab Bank and included debt from Bank of Jordan, Jordan International Bank and the UK’s HSBC. Financing closed in 2003.

Construction began in 2004 and concluded in April 2008. While the existing project has a capacity of 267,000 cm/d, it currently cannot treat more than 220,000 cm/d due to unforeseen high loads.

As a result, the expansion project was announced in early 2009. An advisory group comprising the Netherlands’ KPMG, the UK’s Atkins and UK-based firm Allen & Overy was selected to work on the expansion project at the end of 2009.

Payments from the project are based on availability and treatment. A minimum payment is guaranteed by the Water Ministry for availability of the project for 160,000 cm/d for the existing plant and 220,000 cm/d once the expansion project becomes operational in 2014. A treatment payment is paid on top of this value. Payments are guaranteed by the Finance Ministry.

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