Local private utility company Utico has signed a joint venture contract with Spain’s Grupo Cobra to develop a AED719m ($196m) independent water project (IWP) in the UAE emirate of Ras al-Khaimah.

The joint venture company will be called Al-Hamra Water Company, with Utico holding a 60 per cent share and Grupo Cobra holding the remaining 40 per cent. The 22 million-imperial-gallon-a-day (MIGD) reverse osmosis (RO) plant will be partly powered by a proposed 40MW solar plant, which Utico is also planning to develop.

MEED reported in July 2014 that five prequalified groups had been invited to submit bids in August for the desalination project.

The contract for the IWP is different from the vast majority of IWP agreements in the region, due to the fact that there is no government stakeholder in the project.

“It is a uniquely structured and designed project,” said Richard Menezes, managing director of Utico, speaking at the signing of the agreement with Grupo Cobra in Dubai on 6 August.

Utico, which has its own electricity and water networks, will directly bill consumers for the water. But Menezes says the state utility for the northern emirates, Federal Electricity & Water Authority (Fewa), will eventually be the offtaker for some of the production.

“The [UAE] Ministry of Public Works signed a contract with utilities for offtake agreements,” Menezes said. “Our network is linked to Fewa’s, and under the contract, Fewa can offtake up to 90MIGD. At the moment, about 9-10MIGD goes to Fewa, so there is plenty of capacity left [under the agreement].”   

Menezes stated at the contract signing that financial close for the scheme was expected shortly.

“We received credit approval from six banks, and three banks were shortlisted,” said Menezes. “Most of the major terms have been agreed, about 95-98 per cent. So we expect financing to close within the next three to four weeks.”

Menezes revealed on the sidelines of the signing ceremony that the debt-to-equity ratio for the water project was 80/20.

Khaled Nasser Lootah, member of the board of Utico, said the planned photovoltaic (PV) solar plant would power the desalination facility during the day, and power from Utico’s existing three power stations would provide electricity for the project at night.

The legal adviser for the project is the US’ Latham & Watkins and the financial adviser is the Netherlands’ KPMG.