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AIIB in lending syndicate to Oman solar power project
Project will be the first renewable energy financing for AIIB in the Gulf Cooperation Council region
Michael Marray 1 Apr 2020

THE Asian Infrastructure Investment Bank (AIIB) is amongst the lenders on the 500MW Ibri II solar power project in Oman.

Last week lead sponsor ACWA Power of Saudi Arabia announced that it had reached financial close on the project, via a US$275 million senior debt facility with a maturity of 16.5 years.

The six mandated lead banks are AIIB, Standard Chartered Bank, Bank Muscat, Riyad Bank, Siemens Bank, and Warba Bank. AIIB is providing US$60 million.

"The project, which is the largest utility scale solar PV project in Oman, will also be the first renewable energy financing for AIIB in the GCC (Gulf Cooperation Council) region, paving the way for a stronger partnership with the Beijing based international multilateral bank in the future,” says Rajit Nanda, chief investment officer for ACWA Power.

ACWA Power is leading a consortium that also features Gulf Investment Corporation (GIC) of Kuwait and Alternative Energy Projects Co (AEPC). The consortium won the licence in March 2019, signing an agreement with the Oman Power and Water Procurement Company.

The project is being developed on a BOO (Build Own Operate) basis, with total project cost estimated at US$400 million.

The 500MW greenfield solar photovoltaic power plant is located around 300 kilometres west of Muscat, and is Oman’s first utility scale renewable energy project to be connected to the grid.

“AIIB’s investment will increase the availability of Oman’s renewable power generation capacity and contribute to filling the anticipated gap in peak demand,” says AIIB vice president DJ Pandian. “The project will also help the country move toward a more balanced and environmentally sustainable energy mix to ensure long-term energy sustainability.”

According to the AIIB, Oman’s sustained economic and population growth over the past decade has led to fast-growing electricity demand and put a strain on the existing power infrastructure. The country has one of the highest solar densities in the world, providing great development potential for solar energy resources. Currently, almost all the installed electricity capacity in Oman is fueled by natural gas, leaving huge potential for renewable energy.

AEPC is a Kuwaiti based company established with the aim of making innovative, renewable energy solutions readily available in the MENA (Middle East and North Africa) markets. The project development team designs, builds, finances and operates renewable energy assets.

ACWA Power is the lead investor in the project with a 50% stake, while GIC holds 40% and AEPC 10%. 

ACWA Power is a leading developer, owner, and operator of power generation and water desalination plants. The company has close ties to China via a renewable energy subsidiary.

In June 2019 ACWA Power signed an agreement with Silk Road Fund to take a 49% stake in ACWA Power Renewable Energy Holding Ltd (ACWA Power RenewCo).

ACWA Power and Silk Road Fund had previously successfully co-invested in two United Arab Emirates based projects, including the 2400MW Hassyan clean coal power plant and the 950MW hybrid concentrated solar power and photo voltaic fourth phase of the Mohammed bin Rashid Al Maktoum (MBR) Solar Park. The power offtaker is Dubai Electricity and Water Authority.

In March 2019 ACWA Power and Silk Road Fund reached financial close on this fourth phase, which goes under the name Noor Energy 1. A number of Chinese lenders were on the syndicate, including Bank of China, China Everbright Bank, China Minsheng Bank, and Industrial and Commercial Bank of China.

Elesewhere in the region, an ACWA Power led consortium has been named preferred bidder on the US$1 billion Jubail 3A Independent Water Project in Saudi Arabia.  

Saudi Water Partnership Company announced on March 26 that the consortium comprising ACWA Power, GIC and Al Bawani Water & Power Company is the preferred bidder for the development, design, financing, construction, commissioning, operation and maintenance of the Jubail 600,000 m3/day project.

It is located south of Jubail City to supply Riyadh, Qassim and Eastern Provinces with potable water. The project will include storage tanks of one day production as well as in-house solar power to reduce power consumption from the network.

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