Abu Dhabi power project secures $2.15 bln financing

ABU DHABI Mon Oct 19, 2009 3:29am EDT

ABU DHABI Oct 19 (Reuters) - Abu Dhabi has sealed a $2.15 billion long-term financing deal for its Shuweihat 2 water and power project, signalling the return of appetite for regional project finance, officials and bankers said on Monday.

The 22-year financing for the project by Abu Dhabi Water & Electricity Authority (ADWEA) from a consortium of 15 regional and international banks is the biggest financing deal in the region this year.

The Japan Bank for International Cooperation (JBIC) committed half of the financing, while National Bank of Abu Dhabi NBAD.AD is the only bank from the United Arab Emirates that is part of the deal.

"Whilst major economies were going through a troubled financial climate, ADWEA succeeded in achieving the largest long-term financing contract in the region extending to 22 years with several Asian, European regional and local financial institutions," Sheikh Diab Bin Zayed Al Nahyan, chairman of Adwea said in a statement to Reuters.

"The financial closure underlines the strength of Abu Dhabi economy and reassures global economies' trust in the emirate."

Shuweihat 2, Abu Dhabi's eighth independent water and power project (IWPP), is estimated to cost 10 billion dirhams ($2.72 billion). The funding is by a 79:21 debt-equity split.

The loan has been priced at 260 basis points (bps) over Libor, rising to 350 bps at a later stage, bankers involved in the deal said.

"It is the largest project financing deal in the region this year and signifies a rejuvenation of appetite for regional project financing," one of the bankers told Reuters.

"The project is risk-free and based on cash flow. It is state sponsored. Such projects attract financing from lenders."

ADWEA owns 60 percent of the project while France's GDF Suez (GSZ.PA) and Japan's Marubeni (8002.T) own 20 percent each. The 1507 megawatt natural gas-powered plant and 100 million gallons a day desalination facility is due for completion in 2011.

JBIC has underwritten $1.2 billion. The other lenders include France's Natixis, Calyon, BNP Paribas, Societe Generale; Germany's Bayern LB and KFW, Japan's Bank of Tokyo-Mitsubishi, Mizuho, SMBC and Sumitomo Trust, HSBC, Standard Chartered Bank, National Bank of Abu Dhabi and Saudi Arabia's Samba.

Financing for the Shuweihat 2 project ran into trouble last year following the global financial crisis with banks shying away from lending. But the developers secured a $900 million bridge facility from six banks that expired in September this year.

"This long-term loan will take care of the bridge financing," said another banker.

HSBC acted as financial advisor on the project.

Abu Dhabi expects power demand to more than triple by 2020 and the government is considering nuclear power plants as a long term option to meet demand.

In the short-term, power demand growth in Abu Dhabi was expected to come in at around 17 to 20 percent per year due, fuelled by increased industrial and commercial demand, ADWEA has said. (Reporting by Stanley Carvalho, editing by Natsuko Waki)

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