Islamic finance awards 2012: Best project finance deal
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