State-owned refiner Kuwait National Petroleum Company (KNPC) signed on Thursday the first tranche of financing for its multi-billion-dollar Clean Fuels Project, a major plank of the country's economic development plan.

The tranche, provided by local banks and lasting for 10 years, is worth KD1.2 billion ($3.98 billion) and led by National Bank of Kuwait and Kuwait Finance House , KNPC chairman Jamal Al-Noori said at the signing ceremony. Pricing details were not given.

KNPC chief executive Mohammed Al-Mutairi had said last month that the first tranche would be worth 900 million dinars. No reason was given for the increase in size.

The second tranche of the loan, which will be arranged by international lenders, is expected to be $6 billion and close by the end of this year, KNPC acting chief executive Ahmad Al-Jimaz said at the ceremony.

The two tranches comprise about 70 per cent of the total financing required for the project, while the remaining 30 per cent will be financed from KNPC's own funds.

National Bank of Kuwait's share of the first tranche was worth KD400 million, and Kuwait Finance House's portion was KD275 million, NBK's chief executive Isam Al-Sager said at the ceremony. Eleven banks, including five Islamic lenders, took part in the first tranche.

Part of the country's KD30-billion economic development plan, the Clean Fuels Project will upgrade and expand two of the country's largest refineries with a focus on producing higher-value products such as diesel and kerosene for export.  - Reuters