Oman Power & Water Procurement Company (OPWP) has signed a 20-year water purchase agreement (WPA) for Sohar independent water project (IWP).

Spain’s Valoriza, local Sogex and the Oman Brunei Investment Company (OBIC) will develop the RO100m ($260m) project. 

They have formed a project company, Oman Gulf for Water Desalination. Valoriza owns 51 per cent, OBIC 25 per cent and Sogex 24 per cent.

The IWP will have a capacity of 250,000 cubic metres a day, and is due for completion in 2018. It will use reverse osmosis technology.

The project finance deal is due to be signed later in April. The banks are local Bank Muscat, Oman Arab Bank, Bank Dhofar and Bank Sohar.

The senior debt is understood to have a 20-year term and an 80:20 debt to equity ratio.

The pricing is 4.3 per cent fixed for the first three years, then 250 basis points above Omani weighted average interbank rates, a banking source told MEED.

Sohar’s sister project, Barka IWP, signed a water purchase agreement and financing deal in early March.

The 281,000 cm/d project is financed by Japan’s Sumitomo Mitsui Bank Corporation, the Bank of Tokyo Mitsubishi UFJ, Germany’s KfW, and France’s Credit Agricole.

Developers are now preparing bids for the next round of IWPs in Oman. Bids on the 100,000 cm/d Salalah IWP are due in August.

OPWP is expected to tender Sharqiyah and Duqm IWPs.