Bahrain to commission new IWPP in 2010
By K S Sreekumar, February 16, 2009
Bahrain’s $2.2 billion Al Dur independent water and power project (IWPP) will be commissioned next year.
The construction of the 1.234 giga-watt power and 218,000 cu m per day (cmd) water plant would help the kingdom meet the rapidly increasing demand for power and water, Adnan Fakhro, assistant under secretary, Electricity and Water Authority told a press conference today (February 16).
The press conference was called to announce Power-Gen Middle East Conference and Exhibition 2009, which will be held from February 17 to 19 at the Bahrain International Exhibition and Convention Centre.
“The project is very important to us especially when power demand in the kingdom is rising at the rate of eight per cent every year,” Fakhro said.
“The opening of the GCC Interconnection Authority power grid in April will also help meet power demand. One advantage of the grid is that states can convert their surplus power to money by selling electricity to states suffering scarcity. This would negate the need for each state investing huge sums on power plants,” he explained.
Bahrain also plans to build a number of primary sub stations to help the distribution system tackle the extra load when more power comes into the system, he added.
Nigel Blackaby, director of conferences, Pennwell International Power Group, said: “With demand levels for power and water rising steeply in the region and project financing ability contracting fast, there is likely to be some serious debate at Power-Gen Middle East about how the electricity and water sectors will keep pace with the Middle East’s expansion.”
With around 100 expected exhibitors from over 30 countries, Power-Gen has become the most important annual meeting place for international power executives and operators with interests in the Mena region.
Meanwhile, Al Dur is expected to reach financial close at the end of March after a delay caused by tight international credit market conditions.
Calyon, Mashreqbank and Standard Chartered Bank have announced that they have launched syndication of the financing for the project.
Financial close was delayed from December 2008 as a result of the financial turmoil in the last months of 2008 but was launched with revised terms and conditions reflecting the current state of the market, the banks said.
The three initial mandated lead arrangers are each to commit $100 million to the $1.2 billion international tranche of the $2.2 billion financing, which is the first significant project finance deal in the Middle East in 2009.
The financing is structured as an eight-year, non-recourse term loan with a full cash sweep starting 2.5 years after the end of construction and the balloon repayment at maturity is expected to be approximately 80 per cent.
A portion of the debt will be covered by Korean export credit agency Korea Export Insurance Corporation (KEIC).
In addition to the international tranche, there will be an Islamic tranche, a tranche for domestic lenders and a US Exim Bank facility, ranking pari passu with the international tranche.
The financing is structured as a club deal with invited MLAs making commitments of $50-100 million. Credit approved commitments are expected by mid-February.
The project is equally owned by a consortium of GDF Suez and Gulf Investment Corporation (GIC) and benefits from a 20-year power and water purchase agreement with the Electricity and Water Authority of Bahrain (EWA). The EPC contractor is Hyundai Heavy Industries.
The construction schedule was adapted to the new timetable, but Hyundai Heavy Industries has already started work on the site and works are currently being funded by the sponsors. –TradeArabia News Service
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