The sponsors of the 3,927MW Qurayyah gas-fired independent power project (IPP) on the eastern coast of Saudi Arabia have closed financing for the project.

The project company, Hajr Electricity Production Company, is 50 per cent owned by a consortium comprising the local Acwa Power, South Korea’s Samsung C&T and the UAE’s Mena Infrastructure Fund, and 50 per cent owned by Saudi Electricity Company (SEC).

The build-own-operate project has a total cost of $2.72bn, $2.1bn of which has been funded in debt with the remaining $600m provided in equity in the form of a two and a half year bridge loan. The debt is split between dollar and riyal-denominated facilities. The dollar-denominated facility includes tranches funded or covered by three export credit agencies (ECAs):

  • US Exim (US) – $550m
  • KfW (Germany) under a Euler Hermes (Germany) cover – $125m
  • Kexim (South Korea) – $160m

The international bank group (provided $250m in total):

  • HSBC (UK)
  • Standard Chartered (UK)
  • SMBC (Japan)

The local bank group, which have together provided $1bn, comprises:

  • Banque Saudi Fransi
  • National Commercial Bank
  • Samba
  • Arab National Bank
  • Saudi British Bank
  • Saudi Hollandi Bank

Tenor on the debt stands at 23 years. Pricing ranges from 180-225 basis points for the dollar-denominated finance and 145-200 basis points for the Islamic finance tranche.

The project reached financial close on 24 April. The winning developer group was selected for the project in mid-2011. At that stage, the capacity of the project was around 2,000MW. SEC subsequently decided to extend the capacity of the project to its current size (MEED 19:8:12).

In December 2011, construction began on the project which will deliver electricity to SEC under a 20-year power purchase agreement commencing on 30 June 2014. Siemens will provide all major equipment and electrical systems and Samsung C&T will engineer, procure and construct the project as the EPC contractor to deliver the project.

Once completed, the plant will be operated by First National Operation & Maintenance Company, a subsidiary of Acwa Power under a long-term operation and maintenance contract with Siemens providing parts and services for the gas turbines.