Abu Dhabi has signed financing agreements for its first independent power project (IPP). A signing ceremony was held on 16 May in the emirate. A final agreement will be signed by 18 May to officially close the deal.

A Japanese/South Korean consortium of Sumitomo and Korea Electric Power Company (Kepco) was selected by Abu Dhabi Water and Electricity Authority (Adwea)to build the project in October 2010.

Debt funding for the project will be split between a $370m Japan Bank for International Cooperation (JBIC) loan; $370m from Export-Import Bank of Korea through a direct loan and loan insurance; and a $360m commercial bank tranche. Tenor on the debt stands at 22 years.

When the Sumitomo consortium was selected to build the project, the bid had financial backing from France’s BNP Paribas and Japan’s Mizuho. The following banks joined the original financiers and are lenders as part of the commercial tranche:

• HSBC (UK)
• National Bank of Abu Dhabi (UAE)
• Bank of Tokyo-Mitsubishi (Japan)
• Sumitomo Bank (Japan)
• Samba (Saudi Arabia)

Shuweihat S3 will be a 1,600MW project and is due to come online in mid-2013. A 25-year power purchase agreement for the project was signed in February. The plant will not have a desalination component, unlike Adwea’s previous projects.