Kuwaits independent water and power project (IWPP) Al-Zour North has reached financial close, the first such project to close under the Gulf countrys public-private partnership (PPP) laws.
The signing of the documents quickly followed the conclusion of an energy conversion and water purchase agreement (ECWPA), also known elsewhere in the region as a power purchase agreement (PPA), with a UK/French GDF Suez-led consortium on 12 December.
The $1.4bn project financing was provided by Japan Bank for International Cooperation (Jbic) and commercial lenders Japans Sumitomo Mitsui Banking Corporation and The Bank of Tokyo-Mitsubishi UFJ, as well as the UKs Standard Chartered bank and National Bank of Kuwait. Japans Nippon Export Investment and Insurance (Nexi) is providing insurance for commercial banks portion, which amounts to $283m.
The project has closed close to 12 months after the initial contract covering the construction and operation of the approximately 1,500MW gas-fired, combined-cycle power and seawater desalination plant was awarded to GDF Suez, Japans Sumitomo and Kuwaits AH Sagar & Brothers Group.
The sponsors hold a 40 per cent share in the project company. An additional 10 per cent is being held by Kuwaits sovereign wealth funds Kuwait Investment Authority and Public Institution for Social Security.
The remaining 50 per cent of the shares were subject to an initial public offering (IPO) that was fully subscribed earlier this year.
Al-Zour is the first project to be successfully procured by Kuwaits Partnership Technical Bureau (PTB) as part of Kuwaits PPP programme.
The signing could herald more projects financed on a PPP basis, says Craig Nethercott, a lawyer at US-headquartered Latham & Watkins, the firm who advised the project sponsors.
The project, with the dedication of all stakeholders, has successfully set out the path for projects of this kind in Kuwait and should open the doors for significant private-sector involvement in infrastructure in Kuwait, he says.
Other infrastructure projects planned to be built under the PPP programme, including the planned Kuwait metro, were postponed at the beginning of the year and remain under review.