Gulf Investment Corporation (GIC) and France's GDF Suez on Sunday said they have secured $1.6 billion funding for the Al Dur Independent Water and Power Producer (IWPP) project in Bahrain.

The $2.1 billion Al Dur IWPP project is the largest privately-owned industrial project and the third IWPP being developed in the Kingdom. The complex will have a capacity of 1,240 MW of power and 218,000 cubic metres per day of water.

Hit by the global financial crises and the adverse lack of liquidity, the duo completed the limited recourse financing of the project with a short-term innovative financing solution. 'Financing a project of this size is a landmark in the financial markets after the advent of the economic crisis.'

The project was awarded to GDF Suez and GIC by the Bahrain Ministry of Finance on August 28 last year following an international competitive tendering process.

GIC and GDF Suez upheld their commitment to the Government of Bahrain and equally-funded project work, where the project is presently almost 30 per cent completed and is expected to meet the target completion dates agreed with the Government of Bahrain.

The project will deliver electricity and water to the Electricity and Water Authority (EWA) under a 25-year power and water purchase agreement (PWPA).

The first phase of the project will start early in the summer of 2010, with full capacity being achieved in summer 2011. The project comprises a combined cycle gas turbine power plant and a reverse osmosis (RO) technology desalination plant.

The EPC contract was awarded to Hyundai Heavy Industries (HHI), while General Electric will supply the power plant turbines.

Degremont, a subsidiary of Suez Environment, and a world leader in water treatment and desalination, will supply and install the RO desalination facility, which is highly flexible, efficient and environmentally friendly.

Guy Richelle, CEO of GDF Suez Energy Middle East-Asia & Africa said the success of this major finance agreement, the first to be finalized in the Gulf this year, is strong evidence of the confidence of the banking community in the strength of the consortium and the economic development of Bahrain.

'We are proud that together with GIC, we have been able to contribute to the timely completion of the project by providing the interim financing and the necessary guarantees in a time of significant uncertainty, which is a strong testimony to our respective commitment to the Kingdom of Bahrain and to the region,' he added.

Five prominent institutions - The Social Insurance Organization of Bahrain, Instrata Fund, Capital Management House, Bahrain Islamic Bank and First Energy Bank - have entered as new shareholders in the project, where GDF Suez will remain the largest shareholder with a 45 per cent stake.

Hisham Al-Razzuqi, CEO of GIC stated: 'Achieving financial close on a project of this size, in this market, is indeed a great achievement. When the financial crisis hit the world markets, GIC and GDF Suez stood by their commitments in extremely adverse conditions.'

'We committed considerable resources and were determined to see this project completed on schedule. We are grateful to the Government of Bahrain for its support and businesslike approach,' he added.

Al-Razzuqi added: 'The entry of such fine institutions into Al Dur IWPP as shareholders is a further recognition of the merits of the project. We are pleased to have with us again, the Social Insurance Organisation, our partners in Al-Ezzel Power Company.'

'We welcome our new partners: Instrata, Bahrain Islamic Bank and First Energy Bank and recognize the role played by Capital Management House in raising support for the project.'

A syndicate of 20 international and regional commercial and Islamic banks, in addition to the Export-Import Bank of the United