The consortium developing the $2.7bn Safi power project in Morocco is in talks with banks to fund the $2bn debt portion of the project financing.

The UK/French GDF Suez/International Power, Japan’s Mitsui and the local Navera Holding were named preferred bidder on the project in November 2010, but progress on the scheme has slowed significantly since then.

Discussions with about eight to 10 banks to join the 20-year financing for the project are now understood to be at a relatively advanced stage. Sources close to the deal say the financing will be split between a $600m local currency tranche, a $700m direct loan from the Japan Bank for International Cooperation (JBIC), a $600m tranche covered by Japan’s Nippon Export and Investment Insurance (Nexi), and a $220m international bank tranche. Four international banks and four Japanese banks are expected to be in the banking group, along with the Saudi Arabia-based Islamic Development Bank.

Once the financing is in place, construction will start on the 1,320MW coal-fired independent power project (IPP). It will be Morocco’s second IPP and is expected to produce about 27 per cent of the country’s power needs. Safi was first launched in 2008, but has been beset by delays to the bid timeline and the 2009 decision by state utility National Electricity Office (ONE) to move the project to a different site.