Qatar Electricity & Water Company (QEWC) has managed to secure a significant oversubscription for the $450m debt financing for the development of the Ras Abu Fontas A2 desalination plant, according to sources involved in the deal.

The project, which is being developed for Qatar General Electricity & Water Corporation (Kahramaa), will be funded by four local banks, including three Islamic lenders and coordinating bank Qatar National Bank (QNB).

Bankers in Qatar say that pricing on the deal has now been finalised and is slightly less than 200 basis points above the London interbank offered rate (Libor). The project’s total cost is expected to be $550m and the $450m debt being raised will have a tenor of 22 years.

The financing is expected to close early next year, although the timetable for the transaction is still unclear, according to a banker involved in the deal. QEWC began seeking offers from lenders to fund the deal in July.

QEWC will use the funds to build a 72 million gallon-a-day (g/d) multi-stage flash desalination plant next to the Ras Abu Fontas A1 plant. The UK’s HSBC is the financial adviser on the project.