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A consortium led by ACWA Power (a 100% Saudi Owned company), and includes Samsung C&T and MENA Fund issued on 2 December 2011 Notice To Proceed with the construction of the Largest Independent Power Generation Project in the world, Qurayyah Independent Power Project (IPP). The project, to be developed on a BOO (build, own, operate) basis, will be located at Qurayyah, on the eastern coast of Saudi Arabia adjacent to existing SEC facilities and will substantially increase power supplies to the Saudi power grid. The Project, the third of its type, and the largest, IPP being developed by SEC represents another major development in the Saudi power sector to help meet the rapidly increasing power demand in Saudi Arabia. The project company “Hajr Electricity Production Company (HAJR)” was established with the winning consortium owning 50% and SEC owning the remaining 50%.
Eng. Yousef AlOuhali, The Executive Managing Officer of the HAJR stated, from the company office in AlKhobar, on Thursday: "Qurayyah IPP is a Greenfield Independent Power Project with a net generation capacity of 3927 MW. The design production capacity will make it the largest IPP combine cycle gas-fired power plant in the world once completed".
The project is being funded with USD 730 million of equity capital funded through an equity bridge murabaha facility provided by Arab National Bank, Banque Saudi Fransi, The National Commercial Bank, Samba Capital, Saudi British Bank, and Saudi Hollandi Bank and 2,075 million of debt funded by Arab National Bank, Banque Saudi Fransi, Hong-Kong Shanghai Bank, Korea Export Import Bank, Kreditanstalt Fur Wideraufbau, The National Commercial Bank, Samba Capital, Saudi British Bank, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation and US Export Import Bank.
Qurayyah IPP comprises 6 identical groups of equipment, each delivering net output of 654.5 MW. Each group comprises 2 Gas Turbines (GTS), 2 Heat Recovery Steam Generators (HRSG) and 1 steam turbine. The Qurayyah IPP Plant is designed and will be constructed to comply with all applicable environmental laws, guidelines, regulations and standards as per World Bank, IFC and Saudi Presidency of Meteorology and Environment (PME).
The project will deliver 3927 MW of electricity to SEC under a 20 year Power Purchase Agreement (PPA) commencing on 30 June 2014. Siemens will provide all major equipment and electrical systems and Samsung C&T will Engineer, Procure and Construct the project as the EPC contractor to deliver the project. Once completed, the plant will be operated by The First National Operation & Maintenance Company (NOMAC) a subsidiary of ACWA Power under a long-term Operation & Maintenance contract with Siemens providing parts and services for the gas turbines under a Long-Term Service Agreement (LTSA) with NOMAC.
Mr. Yousef AlOuhali, the EMO of Hajr stated: “ We are proud to be the Project Owner of Qurayyah IPP not only because it is the world’s largest combined cycle IPP, but most importantly the project will provide major economic advantage for the Kingdom of Saudi Arabia. First: the project was bid with the lowest tariff possible (21% lower than the nearest bidder), thus delivering over SAR 2 Billion of savings over 20 years to the economy of the Kingdom. Second: the project is designed with the highest thermal performance possible, more than 52% efficiency, or 14% more efficient than the traditional steam power plant exist in the Kingdome now which make it the most efficient in Saudi Arabia. This high efficiency will save the Kingdom more than SAR2M/day in fuel cost, using the present world natural gas price. Third: this high efficiency will also save the Kingdom’s natural resources, as the project will save more than 160 million cubic feet of natural gas per day of equivalent MW production". The Qurayyah IPP Plant is designed and will be constructed to comply with all applicable environmental laws, guidelines, regulations and standards as per World Bank, IFC and Saudi Presidency of Meteorology and Environment (PME). »
ACWA Power announced the successful closing of its upto US$ 300 million inaugural corporate credit facility structured on Murabaha basis (“Facility”) with the addition of two new participant banks. J.P. Morgan Limited (MLA) and MayBank Berhad (MLA) have joined Standard Chartered Bank (Bookrunner & MLA), Citi (Bookrunner & MLA), Bank of America Merrill Lynch (MLA), and Mizuho Corporate Bank Nederland N.V. (MLA).
Commenting on the deal, Ahmet Bekce, Banking Head for the Middle East at Citi, said: ”ACWA Power is clearly an upcoming champion in the MENA power and water utility space. We are pleased to be part of its expansion plans, and to support its future progress.”
Philip Southwell, President of the Middle East and North Africa at Bank of America Merrill Lynch said "Bank of America Merrill Lynch was very pleased to support ACWA Power in this maiden corporate facility transaction. We see strong fundamentals for the power and water markets in our region and expect ACWA Power to continue playing a key role in their growth."
Mr Hideaki Kuraishi, General Manager Structured Finance Division Europe, Middle East & Africa Mizuho Corporate Bank, Ltd noted that “Mizuho Corporate Bank Nederland N.V. is very pleased to be a MLA in ACWA Power’s debut murabaha facility. The Mizuho Financial Group has a strong relationship with ACWA Power and look forward to being a key partner in ACWA Power’s continuing growth, as they build on the considerable success over the past several years.”
The additional US$ 80 million commitment have been accepted under the “Accordion” feature of the Facility that allowed it to be increased to upto US$ 300 million by the 31st December 2011 deadline. The bank market responded favorably to the initial closing of the Facility in June with several banks approaching ACWA Power with the expression of interest to participate in this watershed transaction. ACWA Power accepted a US$ 30 million commitment from MayBank Berhad in September 2011 also in recognition of Malaysia’s lead role in Islamic banking and capital markets
Hamzah Bachee, Head Corporate Banking Global Wholesale Banking at Maybank said “We are honored to be associated with ACWA Power and are confident that this facility will enhance its capabilities as it seeks to expand its operations in the region. Our participation in this facility will further strengthen our Islamic banking portfolio and the contribution to Islamic banking requirements globally"
This has been followed by debt capital market powerhouse J.P. Morgan Limited committing US$ 50 million to close the Facility
“J.P. Morgan is delighted to be working with ACWA Power on this landmark transaction,” said Abdulaziz Al Helaissi, Senior Country Officer of J.P. Morgan in Saudi Arabia. “The Murabaha facility will put the company in a prime position to realise its growth plans both within Saudi Arabia and beyond.”
Standard Chartered Bank acted as Joint Bookrunner and Coordinator for the Commodity Murabaha. Commenting on the transaction David Law, Regional Head of Wholesale Banking MENA Standard Chartered Bank stated that “SCB has been supporting ACWA power from its beginnings and our leadership role in the Commodity Murabaha is another pillar of a long standing relationship with ACWA Power and its primary shareholders. We have been privileged to assist in the development of a regional champion”
“ACWA Power chose to raise the Facility from International banks mainly to consolidate our core banking relationships outside the Kingdom of Saudi Arabia as well. The fact that we obtained the commitment of six major international banks towards this US dollar denominated facility at the height of the European sovereign debt crisis and the ensuing adverse impact on market liquidity and risk premiums, is sure evidence of ACWA Power’s financial adequacy, credit standing and sound management” said Rajit Nanda, Chief Finance Officer of ACWA Power.
The closing of this Facility is achievement of yet another milestone for ACWA Power. In addition to being the maiden medium term Murabaha facility at the corporate level, the fact that it was secured by its own balance sheet without any shareholder credit support is a testament to the confidence in ACWA Power’s capability, capacity and credit standing.
Paddy Padmanathan President & CEO of ACWA Power commented that “the timely closing of the Murabaha facility will fuel our growth plans outside Saudi to help treble our power capacity to 30,000 MW and more than double the water production to 5 million m3 per day in the next four years. 2011 witnessed a quantum leap towards this target with the signing of the power purchase agreement in September for the largest gas fired power plant in the world, the 3,927 MW Qurayyah IPP.” »
A consortium led by ACWA Power International (ACWA Power), and including Samsung C&T and MENA Fund, entered on Wednesday 21 September 2011 into a series of agreements with Saudi Electricity Company (SEC) for the development of the Qurayyah Independent Power Project (IPP). The project, to be developed on a BOO (build, own, operate) basis, will be located at Qurayyah, on the eastern coast of Saudi Arabia, adjacent to existing SEC facilities. It will substantially increase power supplies to the Saudi power grid. The Project, the third and largest IPP of its kind, is being developed by SEC represents a milestone in the Saudi power sector to help satisfy the rapidly increasing power demand. The project company “Hajr for Electricity Production Company” has been established with the winning consortium and SEC owning 50% each.
Qurayyah IPP is a Greenfield Independent Power Project with a net generation capacity of 3927 MW. The design production capacity will make it the largest IPP combined cycle gas-fired power plant in the world once completed. It will also have some of the highest efficiency systems of its kind exceeding 52% fuel efficiency. Qurayyah IPP comprises 6 identical groups of equipment, each delivering a net output of 654.5 MW. Each group comprises 2 Gas Turbines (GTS), 2 Heat Recovery Steam Generators (HRSG) and 1 steam turbine. The Qurayyah IPP Plant is designed and will be constructed to comply with all applicable environmental laws, guidelines, regulations and standards set up by World Bank, IFC and Saudi Presidency of Meteorology and Environment (PME).
The project will deliver 3927 MW of electricity to SEC under a 20 year Power Purchase Agreement (PPA) commencing on 30 June 2014. The winning consortium selected Siemens of Germany to provide all major equipment and electrical systems, and Samsung C&T of Korea to Engineer, Procure and Construct the project as the EPC contractor to deliver the project. Once completed, the plant will be operated by The First National Operation & Maintenance Company (NOMAC), a subsidiary of ACWA Power, under a long-term Operation & Maintenance contract, with Siemens providing parts and services for the gas turbines under a Long-Term Service Agreement (LTSA) with NOMAC. All relevant project agreements are being signed today.
The total cost of the project is SAR 10.69 billion (USD 2.85 billion), with 77% funded in the form of debt, split equally between USD and SAR. The USD facilities will include tranches funded or covered by three export credit agencies; US ExIm, Eulerhermes and Kexim. The international bank group providing funds are HSBC, KfW, Standard Chartered and SMBC. The local bank group is Banque Saudi Fransi, National Commercial Bank, Samba and SABB.
Mr. Mohammad Abunayyan, Chairman of ACWA Power stated: “ACWA Power is proud to be the lead developer of Qurayyah IPP not only because it will be the world’s largest combined cycle IPP, but also because we have been able to establish a team of developers, equipment supplier, EPC Contractor, O&M Contractor and debt facility providers who, working together have been able to achieve a 15.5% lower tariff than those of the competing next bidder, thus delivering more than SAR 1.9 billion of savings over 20 years to the economy and the people of the Kingdom.”.
The signing of these agreements today highlights a series of significant milestones:
The third IPP launched by SEC and the largest gas fired IPP in the world.
Qurayyah IPP will use the latest technology to increase the efficiency of fuel utilization and maximize operational flexibility.
Most important of all; even before construction has started, the scrupulously transparent competent procurement process used by SEC has already delivered a savings of SAR 1.9 billion; the net present value difference between the lowest and second lowest tariff of the tender process.
The tariff difference of 21% between the 4000MW tariff and the second lowest tendered tariff for this Qurayyah IPP brings such savings delivered to the Government and the people of Kingdom on all the IPP and IWPP projects ACWA Power is involved with in Saudi Arabia to a total of SAR 7.5 Billion. This validates the thesis that a local developer leading such transactions puts the interests of his home country as its utmost priority; minimizing capital expenses and operating expenses while ensuring reliability of power supplies for entire duration of the contracted commitments, ensuring fuel efficiency, environmental impact mitigation and meaningful employment creation and sustenance for the citizens of the country. »
On July 18, 2011, ACWA Power International (“ACWA Power”), the Saudi-based Water desalination and Power Generation Company completed its acquisition of a 65% controlling stake in Enara Energy Investments PSC (“Enara”) that in turn owns 51 percent of Jordan's Central Electricity Generating Co (“CEGCO”), Jordan's largest electricity producer.
In addition to the above, ACWA Power also announced the completion of the sale of a minority stake in Enara to International Finance Corp (“IFC”), a member of the World Bank Group.
Earlier on June 2, 2011, ACWA Power had announced that it had entered into a binding agreement with Jordan Dubai Capital to acquire a controlling stake in Jordan’s Central Electricity Generation Company (CEGCO). Later, in July this year, ACWA Power had also announced the signing of a binding agreement with IFC for selling a minority stake in Enara. IFC invested circa 10.5 Mn USD for the minority stake in Enara. Both the above transactions value 51% of CEGCO shareholding at USD144 million.
The Central Electricity Generating Company (CEGCO) is the largest power generator in Jordan with seven power generation complexes nationwide, totaling CIRCA 1,550MW of installed power capacity of a mixed portfolio of technology and fuel types that meet around 59% of the country’s current electricity consumption. The acquisition accounts for a culmination of a longstanding endeavor to establish a presence in Jordan and contribute to increasing Jordan’s electricity generation capacity to keep pace with its rapidly growing demand, while being mindful of utilizing the scarce fuel resources in the most efficient manner possible.
In line with this vision, ACWA Power also submitted a bid for the circa 650 MW greenfield power project East of Amman (“IPP3”) and also supported CEGCO (as a majority shareholder) in submitting its bid for a peaking power project of circa 250 MW at one of its existing plant locations. ACWA Power will also be focusing on supporting CEGCO to repower or refurbish its existing power plants which are close to decommissioning and increase the availability and quality of electricity supply in Jordan. All of the above initiatives reaffirm ACWA Power’s support and confidence in the energy sector of Jordan.
ACWA Power currently owns a 65% controlling stake in Enara, while Malakoff, the Malaysian electricity company, and the Athens-based Consolidated Contractors Company, will continue to own respective stakes of 25% and 10% in Enara. CEGCO will continue to be divided in an ownership scheme that sees 40% of the company owned by the Jordanian government. The Social Security Corporation of Jordan owns 9%, while Enara owns the remaining 51%.
Mohammed Abunayyan, chairman of ACWA Power, said in a statement “We believe that Jordan is a stable country politically, economically and socially, and we will work on improving power delivery in the country. ACWA Power has agreed with IFC to implement an environmental and social action plan which will result in improved operational safety and create an environmentally sustainable platform at CEGCO's 7 power plants in the country.”
Francis Gomez, newly appointed head of ACWA Power’s operations in Jordan and the CEO of Enara stated that, “ACWA Power plans to invest significant additional capital to enhance the performance of the power plant complexes; by improving operational efficiency, upgrading capacity, and replacing and renewing plant units as required. These initiatives are expected to increase the amount of energy that CEGCO generates to ensure that it can respond to the increased electricity needs of the country.” »
ACWA Power’s “Bowarege” project successfully closes the refinancing of its commercial bank facilitie
International Barges Company for Water Desalination (“Bowarege”), the owner of two rapidly deployable, barges-mounted reverse osmosis desalination plants with 50,000 m3/day production capacity, is pleased to announce the successful closing of its 140 Million SAR refinancing of commercial facilities. This followed the partial refinancing of the 370 million SAR construction period facilities with SAR 175.4 million 7 year term loan from Saudi Industrial Development Facility (“SIDF”) in 2010.
Saudi Hollandi Bank has structured and arranged the 140 million SAR refinancing under two tranches with loan maturities b/w two and five years to replace the balance amount of construction phase facilities. The initial financing of the project was fully secured and supported by the shareholders of ACWA Power and Rakaa Saudia Power & Water to reflect the project’s then construction risk, as well as was based on a short term repayment profile to match the three year offtake agreement, and thereby subjecting the project to otherwise avoidable cash constraints. Therefore the success of this refinancing is accentuated by the fact that these facilities have been secured with relatively longer repayment profiles and with a minimal recourse to Bowarege’s shareholders thereby evidencing the banks confidence in the project’s current and future operating performance.
Being the world’s only full-time, commercially-operational and self-contained desalination plants mounted on transportable barges, the project has proven itself as the only viable solution for addressing temporary and chronic water shortages in the Kingdom. It has to date achieved successful stints at Shuaibah (delivering water to Makkah and Jeddah in 2008 ahead of additional supplies coming on line from Shuaibah IWPP project), then at Shuqaiq (Asir Region) in first quarter of 2009 to mid 2010 ahead of Shuqaiq IWPP coming on line, and now at the Madinah-Yanbu Desalination Plants complex to serve the industrial city and the city of Madinah where the plant availability of 90% is being maintained to dispatch on average 45,000 m3/day. The barges to date have produced over 30million cubic meters (8.1 billion US gallons) of drinking water from surface Red Sea waters.
Mr. Mohammad Abunayyan, Chairman of Bowarege on this noteworthy occasion highlighted that “Bowarege is making an important contribution in addressing water supply-demand gap at coastal cities and specially meeting any temporary shortages such as those witnessed in Jeddah during the summer of 2008. Bowarege and its shareholders are most grateful to H.E the Minister of Water & Electricity, H.E. the Governor of SWCC and other senior managers for firstly their confidence in the concept, and thereafter for their encouragement and support in addition to their acknowledgement of its reliability and performance”.
Celebrating the completion of Bowarege refinancing, Eng. Abdullah Bajunaid, Executive Managing Officer of Bowarege commented that “The overall impact of Bowarege refinancing is a substantial extension of the repayment period of its loan facilities and which now more closely matches the project’s optimal operating cash flows at a sustainable capacity utilization level. This ensuing relief to Bowarege’s cash flows will help the project’s internal financing of its ongoing operational improvements as well as any expansion deemed to be viable. On behalf of Bowarege team I am thankful to the Saudi Hollandi Bank and Saudi Industrial Development Fund for their confidence in the project. I am also grateful to the shareholders and specially ACWA Power’s finance team for its untiring efforts in executing a highly competitive refinancing in a record timeframe”. »
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