Marafiq to approach banks for $800m loan

28 April 2010

Saudi utility company planning to tap local banks

Power & Water Utility Company for Jubail & Yanbu (Marafiq) is planning to raise between SR2.5-3bn ($667-800m) in the next few months through a corporate loan deal.

According to sources in Saudi Arabia, Marafiq has already appointed the local Samba to arrange the loan. The deal will be denominated in the local currency and is targeted at local banks. A source close to Marafiq says the loan deal will be launched in the next few months and could have a tenor of up to 15 years.

The source close to Marafiq says: “The loan will have some security over Marafiq’s receivables from utility bills so that should give lenders some comfort about lending over the longer tenor.”

Marafiq is currently planning to develop two plants at Yanbu, including an interim power plant with capacity of up to 700MW, followed by a much larger scheme to develop a plant with a capacity of 1,700MW of power and 121 million gallons a day (g/d) of water.

The larger scheme was originally intended to be developed as an independent water and power plant (IWPP). This idea was scrapped in 2009 after the Yanbu plant was merged with another project in the area, the Yanbu 3 IWPP sponsored by Saline Water Conversion Corporation (SWCC), and the government decided to develop the joint scheme on an engineering, procurement and construction (EPC) contract.

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