September 8, 2015 / 11:28 AM / in 4 years

UPDATE 1-Oman's ORPIC to use debt to finance most of $5.2 bln plastics plant - CFO

* Firm contacts 35 banks, eight export credit agencies

* Expects to sign financing deal in October

* Sumitomo Mitsui Banking Corp advising ORPIC on transaction (Adds context, details)

By Fatma Alarimi

SOHAR, Oman, Sept 8 (Reuters) - State-owned Oman Oil Refineries and Petroleum Industries Co (ORPIC) will borrow money to finance 70 percent of its $5.2 billion plastics production complex, its chief financial officer said on Tuesday.

The complex, the Liwa Plastics Project, is being built in the northern port city of Sohar and aims to further diversify the sultanate’s economy away from hydrocarbons. It is due to be completed in 2018.

ORPIC has contacted 35 banks - both domestic and international - and eight export credit agencies to fund the project, CFO Nazar al-Lawati told a news conference.

It comes as Omani firms are increasingly tapping international debt markets, partly because the government - traditionally a major source of financing for infrastructure projects - has been hit hard by a plunge in oil prices and does not have the large cash reserves of other Gulf states.

Hilal al-Hinai, ORPIC’s general manager of corporate support, told Reuters that the company expects to sign a financing deal with local and international lenders in October.

Sumitomo Mitsui Banking Corp is advising the firm on the transaction.

The ORPIC officials did not elaborate on the nature of debt financing or the tenures they are seeking. The remaining 30 percent of the funding will come from equity from the company, according to a presentation at the news conference.

Hit by lower oil revenues, the government swung to a deficit of 1.92 billion rials ($4.98 billion) in the first half of 2015, from a 250-million-rial surplus a year earlier. This has affected liquidity in the local banking system as government deposits have declined. (Writing by Archana Narayanan; Editing by Jason Neely and Pravin Char)

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