 |
| Qurayyah IPP |
| Return to the Islamic finance awards index |
In September a consortium led by Saudi-based Acwa Power entered into an agreement to proceed with the construction of what is set to be the world’s largest independent power generation project: Qurayyah Independent Power Project. The project will be located on the eastern coast of Saudi Arabia, adjacent to facilities owned by Saudi Electricity Company, and will operate on a build, own and operate basis. The electricity generated will be delivered to Saudi Electricity Company under a 20-year power purchase agreement starting in June 2014. The project reflects growing demand for energy in the Middle East, where consumption grew from 0.7% of world totals in 1973 to 4.7% in 2009.
Financing for the project totals $2.8 billion, with 51% of the project’s total funding being raised through Islamic project financing. The project is the largest ever financing implemented for an IPP in Saudi Arabia without credit support from the government.
Qurayyah IPP is being funded with $730 million of equity capital funded through an equity-bridge murabaha facility and $2.075 billion of debt. The equity bridge is the first instance of an Islamic syndicated finance facility being used to raise equity for a power project. More than half of the debt is Islamic through the use of a procurement facility. In total 60% of the project costs are to be financed through Islamic debt using an Eastern Bank Limited murabaha facility.
Arab National Bank, Banque Saudi Fransi, National Commercial Bank, Samba Capital, Saudi British Bank and Saudi Holland Bank are providing the equity bridge facility. The debt is funded by Arab National Bank, Banque Saudi Fransi, Hong Kong & Shanghai Bank, Korea Export Import Bank, KfW, National Commercial Bank, Samba Capital, Saudi British Bank, Standard Chartered, Sumitomo Mitsui Banking Corporation and US Export Import Bank.
The project will be 50% owned by the winning consortium – consisting of Acw Power, Samsung C&T Corporation and Mena Infrastructure Fund – and 50% by Saudi Electricity Company.
