Under the terms of the mandate, KfW is expected to underwrite the entire commercial debt portion of the project financing, which has a 70:30 debt:equity split. The debt will be made up of a mixture of export credits extended by German export credit agency Hermes and commercial borrowing. HSBCis advising SIUCI, which is a wholly-owned subsidiary of the local Bahwan Trading Company.

The plant, located in the Sohar industrial zone, is due to begin production of 3,500 tonnes a day (t/d) of urea and 2,000 t/d of ammonia in 2005. SIUCI has a firm offtake agreement in place with Transammoniaof the US for the supply of the plant’s entire urea output. Excess ammonia will be marketed on the Indian subcontinent (MEED 19:4:02).

KfW is also expected to play a key role in the neighbouring methanol project planned in Sohar. The $450 million scheme being promoted by the local Omzest Group, Oman Oil Companyand Germany’s Ferrostaal entails the construction of a 5,000-t/d plant. Project finance is understood to be structured via a 70:30 debt:equity package (MEED 1:11:02).