Abu Dhabi has signed agreements to build its fifth water and power project, Taweelah B, that will supply 2,000MW of power and 160mn gallons of water a day by 2008.
Shaikh Diab Bin Zayed Al Nahyan, chairman of the Abu Dhabi Water and Electricity Authority (Adwea), signed the agreements with the developers of the project and banks that will provide a US$2.667bn financing facility.
“Today, we have achieved an important milestone, the fifth successful IWPP (independent water and power project) in Abu Dhabi. The Taweelah B project is being financed by a combination of debt and equity with the debt portion approximately over US$2bn,” said Adwea’s director of privatisation Abdullah Saif Al Naeimi.
“This is the largest privatisation project in the water and power sector in the region in terms of investment and capacity. The total production capacity of the plant will reach 2,000MW of power and 160mn gallons per day (gpd) of water when it becomes commercially operational in 2008.”
The financial package includes a US$940mn commercial loan, an equity bridge financing of US$527mn and a US$1.2bn loan by the Japan Bank of International Cooperation (JBIC).
Some 15 local and international banks will underwrite the commercial loan. Of these, the three structuring banks Standard Chartered, BNP Paribas and KfW are each underwriting US$75mn. The remaining 12 banks will each underwrite US$59.8mn.
National Bank of Abu Dhabi and Abu Dhabi Commercial Bank have underwritten equally Adwea’s portion (60%) of the equity bridge finance. The commercial loan or the main tranche is a 20-year debt with a step up pricing structure. The facility is expected to go into general syndication after full financial close which is expected to be in May this year.”
JBIC senior executive director Takayuki Yamada says the bank is committed to the UAE with US$3.6bn in financing so far. “The structuring and documentation of this project financing is unusual and the speed at which it was done is praiseworthy.”
Among the other agreements signed was the asset transfer agreement.
HSBC acted as financial advisor on the project.
An international consortium led by Japan’s Marubeni Corporation was selected developer of the project by Adwea last year after competitive bidding.
This is the largest privatisation project in the water and power sector in the region. The financial package includes a US$940mn loan, an equity bridge financing of US$527mn and US$1.2bn loan from JBIC
National Bank of Abu Dhabi (NBAD) is playing a major role in the financing of the Taweelah B project. The bank is not only a mandated lead arranger (MLA) along with two other local banks but is also providing a working capital facility of US$30mn. It is also acting as security trustee, onshore account bank and an equity loan provider.