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Saudi Electricity Company (SEC) and ACWA Power have announced that Rabigh 1 independent power project (IPP) has acquired refinancing of its senior facilities
The project is housed under Rabigh Electricity Company (RABEC), which is owned by ACWA Power, Korea Electric Power Corporation (KEPCO) and SEC.
According to ACWA Power, the project had achieved financial close in 2009, which enabled it to successfully fund the construction and commissioning of the 1,204MW fuel oil fired power project at Rabigh, situated on the western coast of Saudi Arabia.
The project that was built with a total project cost of over US$2.5bn had many firsts to its credit. It is the first IPP project in the Kingdom to be procured without a sovereign guarantee. The project introduced for the first time a Chinese EPC contracting consortium and major power plant equipment of Chinese manufacture in the GCC region. It was also the first major project finance transaction in the region in the aftermath of the global financial crisis of 2008-09.
Given that the construction risk and the early operation risk have been successfully eliminated, RABEC decided to refinance its long-term non-recourse facilities and mandated ACWA Power to implement the refinancing. The closing of the refinancing is an endorsement of the bank market on the IPP model in Saudi Arabia and ACWA Power-led consortium’s ability to deliver on world-class construction and operation of the project. SEC has also played a key role in the refinancing process and helped in securing maximum savings for the stakeholders.
The refinancing facilities of over US$1.82bn equivalent in aggregate were provided on a combined conventional and Islamic basis. The two classes of financing parties will share the transaction security package.
The uncovered conventional debt consisting of the dollar-denominated international tranche of in excess of US$300mn was provided by a group of Korean Insurance Companies (including Samsung Life and Dongbu Insurance/ Hyundai Asset Management) and international commercial banks (including Natixis, MUGF, CA-CIB and Standard Chartered Bank).
Thamer Al Sharhan, chairman of RABEC, said, “It is heartening to see the Rabigh 1 IPP project to go from original financial close, construction, three years of smooth operation and now successful refinancing. This demonstrates the success of the IPP model in the Kingdom and shows how proactive financial management can improve the economics for all parties concerned.”
Fahad Alsudairi, SEC CFO, added, “The refinancing of Rabigh 1 IPP has been achieved under difficult financing conditions and is structurally a win-win for all parties concerned. We commend the efforts of the shareholders in taking the transaction to a closure. It demonstrates value creation for shareholders as well as the offtaker.”