Approximately $13bn worth of financing is needed for the power and water deals that are expected to close in 2010, according to a leading industry executive.
Rajit Nanda, chief financial officer at Saudi Arabia’s Acwa Power, says most transactions will rely on funding from the project finance market.
“With 12.1GW of power and 800,000 cubic metres a day of desalinated water projects expected to bid this year alone in the Gulf region, we project that it will require over $13bn to finance these transactions,” said Nanda at MEED’s Middle East Project Finance 2010 conference in Bahrain on 16 February.
Developers are increasingly looking at the region’s power and water sector, he added, particularly for independent water and power projects (IWPP). “The IWPP model has become extremely competitive as the sector is regarded as very stable,” he said.
It is projected that Saudi’s power demand will grow by approximately 3.6 per cent a year until 2020 and water demand will grow by more than 10 a cent per year until 2014.
“Given that the price of crude oil today is averaging around $75 per barrel, we believe that there should be ample liquidity in Saudi Arabia to support new projects,” said Nanda.