Japan’s Mitsui & Company, Saudi Arabia’s Acwa Power and the local Dhofar International Development and Investment Holding Company (DIDIC) have signed a $1.4bn project finance deal for the Ibri/Sohar independent power plant (IPP).

Financial close is expected in the third quarter of 2016.

The agent banks were France’ BNP Paribas, Japan’s Bank of Tokyo Mitsubishi UFJ and the local Bank Muscat.

They were joined by a syndicate of international and local banks to total ten lenders, including Japan’s Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Mizuho Bank and Mitsubishi UFG Trust and Banking Corporation, the UK’s Standard Chartered, Germany’s KfW, and the local Bank Dhofar.

The pricing is between 130 to 190 basis points over London interbank offered rates (Libor), on mixed US dollar and Omani riyal lending.

The tenor will be 15 years with a grace period for construction.

UK law firm Allen & Overy advised the sponsor and the US’ Shearman & Sterling advised the lenders.

The power purchase agreement (PPA) was signed with Oman Power & Water Procurement Company (OPWP) on 1 May.

The 3,219MW power plant is due to begin commercial operations in April 2019.

It will be split between two sites in Sohar and Ibri, and a separate special-purpose vehicle (SPV) will be formed for each facility. The Sohar plant will have a generation capacity of 1,710MW, and the Ibri facility will have a total capacity of 1,509MW.

Mitsui holds a 50.1 per cent stake. Acwa owns 44.9 per cent and DIDIC the remaining 5 per cent.

This is Mitsui’s third IPP in Oman.

Mitsui and Acwa reached a financial close on the Salalah 2 IPP in August 2015. A similar group of seven banks lent $450m for the 445MW scheme.