Terms are close to being finalised on the $720 million commercial debt package for the second Ras Laffan independent water and power project (IWPP).

A group comprising BNP Paribas, Calyon, HSBC, Qatar National Bank, Societe Generale and Standard Chartered Bankhas tabled fully-underwritten commitments and is expecting the award of a formal mandate as soon as the 25-year power and water purchase agreement (PWPA) is signed (MEED 1:10:04).

This has been delayed by Qatar General Electricity & Water Corporation (Kahramaa) until the winning developer consortium – comprising Qatar Electricity & Water Company, with 55 per cent, the UK’s International Power, with 40 per cent, and Japan’s Chubu Electric Power Company, with 5 per cent – has completed negotiations with Qatar Petroleumover gas supply and seawater purity risk. Sources close to the deal say the PWPA is unlikely to be signed before the end of the year.

The banks are expecting to be paid upfront fees of 125 basis points (bp) on the 20-year borrowing. It has a margin of 105 bp over Libor pre-completion, which drops to 100 bp post-completion before gradually stepping up to 150 bp. It is anticipated that there will be no sub-underwriting stage and that the deal will go straight to general syndication.

The IWPP will have capacity of 1,025 MW and 60 million gallons a day of water.