The Japanese/Korean consortium that is preferred bidder on Abu Dhabi’s Shuweihat 3 (S3) project has begun to receive initial responses from banks about the $1.3bn debt package for the project.
Sumitomo and Korea Electric Power Company (Kepco) plan to sign the 15-year power purchase agreement (PPA) for the project with Abu Dhabi Water & Electricity Authority (Adwea) on 15 December, with financial close expected to occur by early March 2011.
The debt funding will be roughly split between a $400m Japan Bank for International Cooperation (JBIC) loan, $400m from Export-Import Bank of Korea through a direct loan and loan insurance, and a $400m commercial bank tranche.
Sources close to the project say the banking group will be made up of about six or seven banks, primarily drawn from those lenders that supported other bidders during the selection process. One banker involved in the deal says “pricing is very aggressive”.
Sumitomo and its advisers are hoping that banks will be able to move quickly on approving loans to the project, because many have already gone through their internal credit approval process with other bidders.
The Sumitomo consortium was selected first-ranked bidder for the project in October and had financial backing from France’s BNP Paribas and Japan’s Mizuho.
S3 will be a 1,600MW project and is due to come online in mid-2013. The plant will not have a desalination component, unlike Adwea’s previous projects, and will also be used as a reserve once the first power is being delivered from Abu Dhabi’s planned nuclear project, which should start delivering power in 2017.