Acwa Power International, an independent developer of power projects based in Saudi Arabia, said its Turkish unit has inked a $1-billion deal to develop a combined-cycle gas turbine power plant near the Turkish city of Kirikkale.

The plant is being built by Acwa Guc Elektrik Isletme ve Yonetim Sanayi ve Ticaretower with a comprehensive long-term financing package arranged by the European Bank for Reconstruction and Development (EBRD).

With a capacity of 950 MW, the project will be able to cover half the energy needs of a city the size of Ankara and will help meet Turkey's ever-growing demand for reliable energy, said a statement from EBRD.  
 
The European bank has played a key role in securing long-term financing for the construction of the new plant by arranging a syndicated loan of $250 million: $200 million for the EBRD's own account and $50 million syndicated to Banque Saudi Fransi which in addition, is providing parallel financing of $100 million under a murabaha Islamic financial instrument.
 
The International Finance Corporation (IFC) is also providing a syndicated loan of $170 million, of which $45 million is syndicated to the Korea Development Bank. Korea Eximbank and Standard Chartered Bank, with cover from Korea Eximbank, are joining as parallel lenders with $90 million and $60 million respectively.
 
The investment being made in the plant, to come up in Central Anatolia, about 50 km east of Ankara, is the largest in the country in recent years, it added.

A key developer, investor, co-owner and operator of plants, Acwa boasts a portfolio of 15,000 MW across investments in the Middle East and North Africa (Mena), Southern Africa and Turkey.

Highlighting the EBRD's leading role in arranging financing for the project, Nandita Parshad, the director for power and energy said this was a landmark transaction for many reasons.

"First it brings together international financial institutions and commercial banks to lend on similar terms; offers the longest tenor to date - 16 years - for a power project in Turkey and is also the first time in the country that an independent power producer is financed on a limited-recourse basis," explained Parshad.
 
Acwa Power president and chief executive Paddy Padmanathan said the Kirikkale power project was the company's first investment in Turkey.

"It is a solid foundation for the multi-fuel power-generation portfolio we seek to establish in this thriving economy. The project represents yet another milestone in Acwa Power's market expansion beyond the GCC countries," he noted.
 
According to him, the hitech gas-fired power plant will use a combined cycle in which the fuel - natural gas - is fed into a gas turbine that generates electricity, while the waste heat of the exhaust is captured to produce steam. "This, in turn, drives a steam turbine which produces additional electricity, all for the same fuel input," he added.

The integration of these two thermodynamic cycles improves overall efficiency for electricity generation, significantly reducing fuel costs for each kWh of electricity produced.

EBRD said, as an independent power producer, the Turkey plant will operate on a merchant basis, selling the electricity it generates on the power market.
 
The power produced by this plant is expected to replace more carbon-intensive energy generation in Turkey and will lead to an annual carbon dioxide emissions reduction of over 1,825,000 tonnes, it added.
 
According to Parshad, investment in sustainable energy has been a top priority for EBRD in Turkey.

The bank started operations in the country in 2009 and currently works from offices in Istanbul, Ankara and Gaziantep. To date, it has invested over €4 billion ($4.97 billion) in the country with half of this dedicated to sustainable energy  projects.-TradeArabia News Service