Singapore-based Sembcorp will complete the funding for its $1bn Salalah power and water project in Oman by 14 November, according to sources close to the deal.
The Oman Power & Water Procurement Company (OPWP) is eager to get financing in place before the end of November in order to keep to its construction schedule for the plant.
The deal will involve $750m of debt, which will be provided by the UK’s Standard Chartered and two other international banks. Standard Chartered has been forced to provide around $450m of commitments to the project, including underwriting about $400m of debt that it will sell down to Chinese banks towards the end of the year.
The UK bank had been in talks with several Chinese banks and Chinese export credit agency Sinosure to fund around $375m of the project debt since September. Another $375m was due to be provided by Standard Chartered and other international banks. However, the Chinese lenders have struck problems getting the necessary internal approvals for the loans before the date OPWP wanted to have funding in place (MEED 28:10:09).
The delays have forced Standard Chartered to step in to fill the gap to ensure OPWPs timeline is met. The move by Standard Chartered is the second time it has agreed to provide large loans to the project in the hope of reducing its exposure later.
When Standard Chartered first started to approach banks to finance the deal in February it had agreed to underwrite all the projects’ $750m debt. The UK bank withdrew its underwriting commitment in April when Sembcorp lost its preferred bidder status on the project.
In September when Sembcorp had been reconfirmed as preferred bidder, Standard Chartered was aiming to fund the project through a club deal with no underwriting.
Once the financing is completed construction should begin within a few weeks, according to sources close to Sembcorp.