Sumitomo seeks local banks' support for Ras al-Zour plant

11 July 2008

Japan's Sumitomo Corporation is contacting Saudi banks as it seeks to strengthen its bid for the $5.5bn Ras al-Zour independent water and power project (IWPP), which it submitted without the support of any Saudi institutions.

As with most other project deals in the kingdom, bidders normally include Saudi banks as part of the financing group for the plant. The other two groups vying for the project, the local Acwa Power and France's Suez Energy, already have the support of Saudi banks.

Local banks including Al-Rajhi, Riyad Bank, Samba and National Commercial Bank are understood to have been contacted by Sumitomo to join a banking group that already includes Royal Bank of Scotland, Citigroup, and Japan's Sumitomo Mitsui Banking Corporation, Mizuho, Bank of Tokyo-Mitsubishi and Japan Bank for International Co-operation.

The three groups submitted bids for the project by the 28 June deadline, with Sumitomo claiming to be the preferred bidder - a claim that was denied by the project sponsor, Water & Electricity Company (WEC), in early July.

Bankers close to the deal say that given the large number of Saudi power projects, WEC is eager to arrange financing for Ras al-Zour by the fourth quarter of 2008, leaving a clear market for the Yanbu IWPP and the Rabigh independent power project to be launched in early 2009 (MEED 2:7:08).

Achieving this would require the selected bidder to be in a position to move quickly once the contract is awarded.

An award is expected in the third quarter of this year.

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