A consortium composed of International Power of GDF Suez (17.5%), Japan's Sumitomo Corporation (17.5%) and Kuwaiti company Abdullah Hamad Al Sagar and Brothers (5%) has achieved commercial close for the $870 million Az Zour North Independent Water & Power Project (IWPP) in Kuwait.
The consortium partners share a 40% stake in the plant, with a furtner 10% held by Kuwait sovereign wealth funds. The remaining 50% is being sold to the Kuwaiti public through an IPO.
The Az-Zour North Phase I project, regarded as a pathfinder transaction, is the first project to have been successfully procured by the Partnerships Technical Bureau of the State of Kuwait as a part of Kuwait's PPP programme and includes the construction and operation of a gas-fired combined cycle power and seawater desalination plant with a capacity of approximately 1,500 MW and 102-107 MIGD.
The total project cost will be funded by a mix of project finance debt and equity in an approximate 80:20 ratio.
The total project cost, including the construction cost, is expected to be around US$1,800 billion. US$ 1,430million of the project cost will be co-financed by the Japan Bank for International Cooperation (JBIC) and international commercial banks through the project financing scheme. A part of the financing which will be done by Japanese commercial banks will be covered by the insurance for loan of business funds by the Nippon Export and Investment Insurance (NEXI).The other mentioned lenders for the first phase include NBK, Bank of Tokyo-Mitsubishi, Sumitomo Mitsui Banking Corp and Standard Chartered Bank.
All of the plant's output will be purchased by the Kuwait Ministry of Electricity and Water under a 40-year long-term Energy Conversion and Water Purchase Agreement (ECWPA).
Chadbourne & Parke, BNP Paribas and Lahmeyer International advised Kuwait's Partnerships Technical Bureau.
In addition, International Power and Sumitomo anticipate establishing (on a 50:50 basis) the operation & maintenance (O&M) company for the Az Zour plant. Hyundai Heavy Industries (HHI) and Sidem, a subsidiary of Veolia Water Solutions & Technologies, announced the signing of a US$1.4 billion EPC contract.
The construction for the project will commence by the end of 2013, and the plant is expected to be completed and begin operation by the 4th quarter of 2016.