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Sohar Power Company (SPC), which is developing Oman’s largest independent water and power project in the private sector, has signed US$620mn financing agreements with a syndicate of international and local banks.

The financing package consists of US$549.89mn facility and OR27m performance bond facility by the National Bank of Oman.

SPC is 50% owned by Suez-Tractebel, Belgium’s top utility holding company and one of the world’s top independent power producers, with operations in more than 100 countries on five continents. Suez-Tractebel is a subsidiary of the French energy conglomerate Suez. Omani shareholders such as National Trading Company, Zubair Corporation, WJ Towell & Co, Ministry of Defence Pension Fund and Sogex Oman hold 10% each in Sohar Power.

It was in July 2004 that the Ministry of Housing, Water and Electricity awarded the project to Tractebel EGI, a division of Suez, to design, build, own, operate and maintain the greenfield Sohar independent water and power project. The project comprises a 585MW combined cycle gas turbines plant and a 33mn imperial gallons a day (6,250 cubic metres per hour) water desalination plant.

The plant will be owned by SPC and located in the Sohar Industrial Area, north of Muscat on the Gulf of Oman.

SPC will float 35% of its shares on the Muscat Securities Market within four years of its incorporation, in line with contractual commitment made by the promoters to the government.

The half a billion dollar project will sell electricity and water to the Oman Power and Water Procurement Company under a 15-years power and water purchase agreement commencing on April 1, 2007. This agreement will secure long-term dollarised returns to SPC. A first phase of 360MW is scheduled to be operational on April 1, 2006. To meet the growing power demand in Oman, the project will provide power to the grid as early as 2006.

The syndicate of banks led by BNP Paribas (global coordinator and mandated lead arranger) includes Standard Chartered, Bayerische Landesbank, KBC Finance Ireland, HSBC Bank Middle East, Sumitomo Mitsui Banking Corporation, BankMuscat, Gulf International Bank, NordLB, Arab Bank, Mizuho Corporate Bank, Unicredito Banca Mediocredito, Oman Arab Bank, Natexis Banque Populaires, OIB, Bank Dhofar and NBO.

BankMuscat, one of the lead arrangers, is participating in the project with a US$35mn facility. Oman Arab Bank together with Arab Bank are participating in the long-term loan facility with US$35mn.

Tractebel is present in the region for more than 16 years. In 1994, Tractebel EGI developed the Al Manah power plant (currently 270MW) in Oman, the first plant to be built, owned and managed by an independent power producer in the Gulf. In 2003, Tractebel EGI inaugurated in Abu Dhabi, Al Taweelah A1, a power and water production plant, totaling 1,430MW of electric power and 385,000 cubic metres of daily water production.