Gulf Construction Online - $800m UAQ desal project achieves financial close

UAE Focus

$800m UAQ desal project achieves financial close

01 December 2019

Acwa Power, a leader in power generation and water desalination plants, said its consortium with MDC Power Holding Company, an entity fully owned by Mubadala Investment Company, along with the Federal Electricity and Water Authority (Fewa), has achieved the financial closure for an independent water project (IWP) coming up in the emirate of Umm Al Quwain (UAQ) at an investment of $800 million.

The desalination project, which boasts a 150-million-gallons-per-day capacity, is being funded on a debt to equity ratio of up to 85/15. A syndicate of seven international and local lenders will provide the $680-million senior debt. The mandated lead entities including Korea Development Bank, MUFG Bank, Siemens Bank, Standard Chartered Bank, Sumitomo Mitsui Banking Corporation, First Abu Dhabi Bank and Samba Financial Group helped structure the first IWP non-recourse project finance debt for Fewa on a 24.5-year door-to-door tenor.

On its key achievement, president and CEO Paddy Padmanathan said: “Acwa Power is pleased to partner with Fewa and Mubadala on the first IWP infrastructure in Umm Al Quwain. Successfully achieving financial closure at this stage is testament to the readiness of the market for private-public partnerships.

“It also reflects Acwa Power’s strong financial standing and reliability as well as the credence we have gained from global and financial institutions that has been developed over years of successful operations and partnerships.”

Chief investment officer Rajit Nanda said: “Umm Al Quwain IWP marks a special moment for us, not only because it is the largest desalination project in the Northern Emirates but also due to its role in the development of the first IWP non-recourse project financing structure for Fewa that will deliver value for years to come.”

The Umm Al Quwain IWP is an independent water project based on reverse osmosis technology.

Located at a coastal site in Umm Al Quwain along the border of the northern emirate of Ras Al Khaimah, the plant along with the associated intake and outfall facilities is set to be developed to produce 682,000 cu m of desalinated water.

The water purchase agreement (WPA) with off-taker, Fewa is signed for a 35-year term, and the plant is expected to be commercially operational by July 2022.