Ten banks are preparing to extend $1.5bn in project finance for Oman’s Ibri/Sohar 3 independent power project (IPP), with five of them being Japanese.

The lenders are Japan’s Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Mizuho Bank, Bank of Tokyo Mitsubishi UFJ, Mitsubishi UFG Trust and Banking Corporation, as well as the UK’s Standard Chartered, Germany’s KfW, France’s BNP Paribas, and the local Bank Muscat and Bank Dhofar.

Japan’s Mitsui and Saudi Arabia’s Acwa Power signed a power purchase agreement with Oman Power & Water Procurement Company (OPWP) on 1 March.

The developers are aiming to sign the financing documents by the end of March, although this target is very ambitious.

The pricing is expected to be between 130 and 190 basis points over the London interbank offered rate (Libor). The tenor will be 15 years with a grace period for construction.

Mitsui has the majority share in the winning team, with 50.1 per cent ownership. Acwa Power holds 44.9 per cent and the local Dhofar International Development & Investment Holding the remaining 5 per cent.

The Ibri/Sohar 3 scheme will be split between two sites in Sohar and Ibri. The plants are being tendered as one developer contract, but a separate special-purpose vehicle (SPV) will be formed for each plant. The Sohar facility will have a generation capacity of 1,700MW, and the Ibri plant will have a total capacity of 1,450MW.

Other OPWP utility projects are expected to reach a financial close on $600m of debt in the first half. The Barka independent water project (IWP) will be financed by Sumitomo Mitsui Bank Corporation, the Bank of Tokyo Mitsubishi UFJ, KfW, and France’s Credit Agricole.

The 280,000 cubic-metre-a-day (cm/d) project will be developed by Itochu of Japan, UK/French Engie, France’s Degremont and the local WJ Towell.

The 250,000-cm/d Sohar IWP, developed by Spain’s Valoriza, and the local Sogex and Oman Brunei Investment Company, will be financed by four local banks – Bank Muscat, Oman Arab Bank, Bank Dhofar and Bank Sohar.