Rabigh IPP received the award based on not only the funding it attracted; nearly SR10bn ($2.7bn) but did so as the first transaction to reopen access to long tenor project finance since the collapse of the debt and capital markets post the demise of Lehman Brothers and along the way established new benchmarks including being the first IPP/IWPP in the GCC to be undertaken without a Government Guarantee. Saudi banks contributed approximately 58% to the funding through alinma Bank, NCB, Al Rajhi Bank, SABB, Samba and Banque Saudi Fransi. The remaining funds were sourced from foreign banks including the Bank of China, CALYON, HSBC, Standard Chartered and The Export-Import Bank of Korea (Eximbank); and equity provided by ACWA Power International, Korean Electric Power Company and Saudi Electric Company.
Rabigh IPP is the flagship project launched by Saudi Electric Company (SEC) in 2009 structured on a concession or utility outsourcing contract model financed using a limited recourse, project finance framework. The deal was signed in July of 2009 with a 20 year purchase agreement for the full production. Nearly 40 companies and alliances competed for this project which was awarded to the consortium of ACWA Power International and the Korean Electric Power Company (KEPCO) who combined own an 80% share of the project and 20% owned by SEC. This is the first step in SEC’s plan to open up ownership and operations to the private sector to in turn support it to meet the rapidly increasing demand for power in Saudi Arabia between 2009 and 2020.
Eng. Ali Bin Saleh AlBarrak, President and CEO of SEC, said, “As the flagship of what we have planned as a very large and significant IP programme, Rabigh IPP’s success was vital to SEC. We are therefore particularly pleased with the international recognition that the financing of this project has attracted SEC. SEC is proud of its achievement through the role we played in attracting and encouraging domestic and foreign investment into the power generation sector of the Kingdom.”
Mr. Paddy Padmanathan, President and CEO of ACWA Power International, said, “Rabigh IPP not only confirms beyond any doubt the availability of private investment capital and long tenor project finance to well structured private – public partnerships for utility service provision that are sponsored by credible companies but also confirms the maturity of the model by moving beyond Government Guarantees where creditworthy off takers step up with reasonable off take contracts.”
The project is located in Rabigh north of Jeddah, when completed will have a capacity of producing more than 1200 MW, thus contributing to the increasing demand of power in the western region of Saudi Arabia. The project consists of 2 production units with the first expected to be completed by the end 2012 and the second in the second quarter of 2013. Rabigh IPP is the cornerstone of SEC’s SR80bn ($21.3bn) plan to meet the rising demand for electricity in Saudi Arabia. The Board of Directors of SEC had previously approved the offering of 30% of this capacity to the private sector for development and management. SEC expects that demand will reach 60,000 MW in the coming years.
ACWA Power International is a lead developer, owner and operator of independent water and power projects structured on a concession or utility outsourcing contract model. ACWA Power is incorporated in Saudi Arabia with a paid up capital of close to SR3.36bn ($1bn). It holds equity ownership in a portfolio of contracted assets made up of 6,485 MW of power generation plants and 2.31 million m3/day of desalinated water production plants with a cumulative value in excess of SR44.25bn ($11.8bn).
To date ACWA Power’s strategy has resulted in the award of the following concession projects: Rabigh IWSPP, Shuaibah IWPP, Shuaibah Expansion IWP, Marafiq Jubail IWPP, Shuqaiq IWPP and Rabigh IPP.
In addition, ACWA Power has also developed the world’s first two sea going barge mounted, self contained desalination plants each capable of producing 25,000 m3/day of water. The barges can be rapidly relocated to provide fresh water to coastal cities facing shortfall.
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