Kuwait National Petroleum Company (KNPC) has signed a KD1.2bn ($4bn) syndicated loan to finance its Clean Fuels Project (CFP).

The local currency tranche of the KD3bn loan comprised conventional and sharia-compliant facilities.

The mandated lead arrangers were National Bank of Kuwait (NBK) and Kuwait Finance House, an Islamic bank. NBK Capital was the adviser. Eleven local lenders participated in the syndication.

The loan has a ten-year tenor and an amortising repayment structure after a grace period.

MEED reported in March that the pricing guidelines were low, at 100 basis points over Kuwait interbank overnight rates. This is despite a recent rise in the cost of borrowing.

The remaining US dollar tranche is expected to be syndicated shortly. UK-based HSBC is the adviser.

The dollar tranche, expected to reach at least KD1.5bn, will be supported by export credit agencies (ECAs) including Korea Export Import Bank (Kexim) and Japan Bank for International Cooperation (Jbic), as well as ECAs from the UK, Italy and the Netherlands.

This is KNPC’s first external debt financing, and the largest ever syndicated loan in Kuwait.

It will be used to finance the CFP upgrade at the Mina Abdullah and Mina al-Ahmadi refineries.

KNPC awarded contracts for the KD4bn project in mid-2014.

The project is delayed and completion is now expected in 2019.