Oman power project reaches financial close

03 October 2016

The $1.4bn finance deal was signed in June

The 3,219MW Ibri/Sohar 3 independent power project (IPP) in Oman reached a financial close on 29 September.

The project finance deal was signed in June 2016, but securing approvals from the Omani authorities was delayed by the summer break, according to sources close to the scheme.

The developers, Japan’s Mitsui & Company, Saudi Arabia’s Acwa Power and the local Dhofar International Development and Investment Holding Company (DIDIC) borrowed $1.4bn from a syndicate of 10 banks.

The agent banks were France’ BNP Paribas, Japan’s Bank of Tokyo Mitsubishi UFJ and the local Bank Muscat.

The other lenders were Japan’s Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Mizuho Bank and Mitsubishi UFG Trust and Banking Corporation, the UK’s Standard Chartered, Germany’s KfW, and the local Bank Dhofar.

The pricing is between 130 and 190 basis points over London interbank offered rates (Libor), on mixed US dollar and Omani riyal lending.

The tenor will be 15 years with a grace period for construction.

UK law firm Allen & Overy advised the sponsor and the US’ Shearman & Sterling advised the lenders.

The power purchase agreement (PPA) was signed with Oman Power & Water Procurement Company (OPWP) on 1 May.

The 3,219MW power plant is due to begin commercial operations in April 2019.

It will be split between two sites in Sohar and Ibri, and a separate special-purpose vehicle (SPV) will be formed for each facility. The Sohar plant will have a generation capacity of 1,710MW, and the Ibri facility will have a total capacity of 1,509MW.

Mitsui holds a 50.1 per cent stake. Acwa owns 44.9 per cent and DIDIC the remaining 5 per cent.

Mitsui and Acwa reached a financial close on the Salalah 2 IPP in August 2015. A similar group of seven banks lent $450m for the 445MW scheme.

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