The next step is for a ministerial committee to review the terms of the 25-year PPA. That will allow the company to start seeking commercial finance for the $300 million project. The PPA is understood to allow for a 90-day period of preliminary market assessment for commercial finance, with an 18-month deadline for financial close. Under the terms of the agreement, the government will extend to the development company a loan worth 30 per cent of the cost of the project at an interest rate less than that of the commercial debt. However, some 40 per cent of the project’s cost is to be covered through commercial debt.
A fuel supply agreement has been submitted to the Oil Ministry for its comments. The plant is to be run on gas, in line with a government policy to increase the use of gas, rather than oil, powered plants. The Public Electricity Corporationis the offtaker. Yemen is in urgent need of more power capacity, although industry sources say that this could be eased through increasing the efficiency of the national grid, where more than 30 per cent of power is lost.