The World Bank’s International Finance Corporation (IFC) is considering investing in a Greenfield natural gas-fired independent power project (IPP) to be built in the semi-autonomous region of Kurdistan region of northern Iraq.

The project will entail the development, design, financing, commissioning and ownership and operation of the 1,260MW plant being built near Zakho, in Dohuk.

A consortium comprising Brussels-headquartered Unit Investment and Turkish conglomerate Polteks are the project sponsors and will develop the IPP on a build-own-operate (BOO) basis. Unit has a 52 per cent stake in the project company, Polteks has a 36 per cent share and Cem Sirin, a Turkish national who is a member of the Aysal family that controls Unit, holds an 8 per cent stake.

The project is being developed in three phases. Phase 1A covers the construction of 560MW of capacity, including the 400kV Dohuk substation. Phase 1B will cover the addition of a 280MW open-cycle, gas-fired turbine, while phase 2 covers the conversion of the plant to a combined-cycle, gas-fired facility.

The IFC is considering whether to invest up to 10 per cent of the equity in the project. The financial institution is also considering supporting the debt financing of the first phase of the IPP.

The total project cost for phase 1A is an estimated $578m and the IFC is considering lending $100m as an ‘A’ loan, which means the IFC provides the loan from its own account, and up to $65m through its managed co-lending portfolio programme (MCPP).

The MCPP scheme allows institutional investors to passively participate in IFC’s loan portfolio. Investors provide capital on a portfolio basis and deployed by the IFC in individual investments.

IFC’s proposed financing also includes a $240m ‘B’ loan, which means the loan would be raised through other development and commercial banks, backed by an IFC guarantee.

The total cost for Phase 1B is an estimated $204m and IFC is also considering increasing the proposed financing by $140m to support this phase.