Finance secured for 500 MW Omani project despite Covid-19 disruption

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Executives from the consortium behind Oman’s largest solar project to date have spoken of the effort required to achieve financial closure for the 500 MW Ibri II project, given the financial battering markets are enduring during the Covid-19 epidemic.

“Achievement of this milestone together with our partners … notwithstanding the trying financial and macroeconomic challenges prevalent the world over resulting from the Covid-19 outbreak demonstrates our structuring capabilities, the resilience of our long-lasting partnerships and our commitment to OPWP [energy offtaker the Oman Power and Water Procurement Company],” said Rajit Nanda, chief investment officer for developer partner Acwa Power, in a press release issued to announce financial closure of project funding.

Acwa president and CEO Paddy Padmanathan added: “Successfully achieving financial closure during these challenging times is a testament to the determination of all the stakeholders in this project to keep doing the best we can within the constraints we all need to work within.”

Lenders

Acwa this morning announced it had secured – along with project partners the Gulf Investment Corporation and the Alternative Energy Projects Company – $275 million from six lenders to complete the finance for the $400 million project, which will be funded on a 70:30, debt-to-equity basis.

Beijing-headquartered multilateral lender the Asian Infrastructure Investment Bank (AIIB) will offer 16.5-year loans along with state-controlled entities Bank Muscat, in Oman; Riyad Bank, in Saudi Arabia; and sharia-compliant Kuwaiti lender Warba Bank. London-based Standard Chartered and Germany’s Siemens Bank complete the line-up of lenders.

Saving

pv magazine reported in January 2018 the project which was then being tendered had an estimated value of $500 million, indicating how much the prices of solar projects have come down in the intervening period. Ibri II will supply power to state-owned utility OPWP under a 15-year contract. A spokesman for the Hill+Knowlton Strategies PR company employed by Acwa said the Saudi company was unable to answer pv magazine’s request to know what tariff would be paid for the energy generated.

The project, the Beijing-led AIIB’s first renewable energy investment in the Gulf Co-operation Council (GCC) region, is scheduled to be commissioned this year, according to the original tender and notwithstanding potential coronavirus disruption to project timescales. Since Wednesday, the sultanate has denied entry to all except Omani nationals and once in, citizens cannot leave. Public gathering and commercial restrictions similar to those imposed by governments around the world are also in place.

Ibri II project partners the Gulf Investment Corporation and the Alternative Energy Projects Company are both under some degree of state control, with the former owned by the governments of GCC member states Oman, Saudi, Kuwait, Bahrain, Qatar and the UAE and the latter part of the Kuwait Projects Company in which members of the Kuwaiti royal family are majority shareholders through their Al Futtooh Holding Company vehicle.

This article was amended on 24/03/20 to include the response given by Hill+Knowlton Strategies above.