Oman signs power purchase agreement for Barka and Sohar projects

12 August 2010

Independent power projects to reach financial close by end of August

Oman Power & Water Procurement Company (OPWP) has signed a power purchase agreement (PPA) for the Barka 3 and Sohar 2 independent power projects (IPPs).

The standard 15-year PPA for the Barka 3 and Sohar 2 projects was signed on 10 August with the team led by France’s GDF Suez.

GDF Suez’s consortium includes Yonden, a subsidiary of the Shikoku utility in Japan, Japanese investment firm Sojitz, and Oman’s Bahwan Engineering.

The bid emerged as the frontrunner for both projects in mid-May over rival submissions from Saudi Arabia’s Acwa Power International for Barka 3, and Japan’s Marubeni for Sohar 2. It then entered exclusive negotiations with OPWP at the end of May.

According to sources close to the deal, the GDF Suez team is set to close financing for the projects by the end of August with the following banks:

  • Bayern LB (Germany)
  • Credit Agricole CIB (France)
  • Natixis (France)
  • CIC (France)
  • Europe Arab Bank (UK)
  • HSBC (UK)
  • KfW (Germany)

The projects are set to cost around $1.8 billion in total with $1.3bn to be sourced in debt with an 18-year tenor.

Barka 3 and Sohar 2 will have identical debt structures, but will be signed separately. The Barka project has slightly higher total project costs as a result of seawater extraction factors.  

The US’ Milbank is legal adviser to the lenders. US law firm Chadbourne & Parke is advising the sponsors. OPWP was advised in the tender by the UK’s Berwin Leighton Paisner, Finland’s Poyry and Oman’s Bank Muscat.

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