Japan’s Mitsui & Co and Saudi Arabia’s Acwa Power are expected to sign a $1.5bn project finance deal for Oman’s Ibri/Sohar 3 independent power project (IPP) before the end of the second quarter of this year.

The developers are in the final stages of negotiation with ten Japanese, European and local banks, and are trying to meet a deadline at the end of May.

MEED reported in March that the lenders are Japan’s Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Mizuho Bank, Bank of Tokyo Mitsubishi UFJ, Mitsubishi UFG Trust and Banking Corporation, as well as the UK’s Standard Chartered, Germany’s KfW, France’s BNP Paribas, and local Bank Muscat and Bank Dhofar.

The pricing is expected to be between 130 and 190 basis points over the London interbank offered rate (Libor). The tenor will be 15 years with a grace period for construction.

An equity bridge loan has already been secured.

Acwa and Mitsui signed a power purchase agreement for the 3219MW project with Oman Power & Water Procurement Company (OPWP) on 1 March.

Mitsui holds a 50.1 per cent stake. Acwa Power owns 44.9 per cent and local Dhofar International Development & Investment Holding the remaining 5 per cent.

The Ibri/Sohar 3 scheme will be split between two sites in Sohar and Ibri. The plants are being tendered as one developer contract, but a separate special-purpose vehicle (SPV) will be formed for each plant. The Sohar facility will have a generation capacity of 1,710MW, and the Ibri plant will have a total capacity of 1,509MW.

Yaqoob bin Saif Al-Kiyumi, chief operating officer of OPWP, told reporters at the signing ceremony for Ibri/Sohar IPP that Oman is planning two 800-1,000MW power plants, which will start operation in 2021 and 2022. One of the sites is in Muscat, and prequalification will begin in 2016. Prequalification for the other plant, whose location has not been set, will begin in 2017, according to al-Kiyumi.

Two independent water projects (IWPs) reached a financial close earlier in 2016, at Barka and Sohar. Banks are studying developers’ proposals for the next round of IWPs, in Sharqiyah and Salalah.