$1.6bn raised to finance Al Dur project.

Byline: ARTHUR MACDONALD

MANAMA: Gulf Investment Corporation (GIC) and GDF Suez have raised $1.6 billion for the financing of the $2.1bn Al Dur water and power project.

Al Dur Independent Water and Power Producer project is the largest privately-owned industrial development in Bahrain.

Financing a project of this size is a landmark in the financial markets after the advent of the economic crisis.

The project will deliver electricity and water to the Electricity and Water Authority under a 25-year power and water purchase agreement.

The first phase of the project will start in the summer next year, with full capacity being achieved in summer 2011. It consists of a combined cycle gas turbine power plant and a reverse osmosis technology desalination plant.

The complex will have a capacity of 1,240 megawatts of power and 218,000 cubic metres per day, 48 million imperial gallons per day, of water.

"The success of this major finance agreement, the first to be finalised in the Gulf this year, is strong evidence of the confidence of the banking community in the strength of the consortium and the economic development of Bahrain," said GDF Suez Middle East, Asia and Africa chief executive officer Guy Richelle.

"We are proud that together with GIC, we have been able to contribute to the timely completion of the project by providing the interim financing and the necessary guarantees in a time of significant uncertainty, which is a strong testimony to our respective commitment to Bahrain and to the region."

Five prominent institutions have entered as new shareholders in the project.

The Social Insurance Organisation of Bahrain, Instrata Bunya Fund, Capital Management House, Bahrain Islamic Bank and First Energy Bank have joined GDF Suez and GIC in the project, where GDF Suez will remain the largest shareholder with a 45 per cent stake.

"Achieving financial close on a project of this size, in this market, is indeed a great achievement," said GIC chief executive officer Hisham Al Razzuqi.

"When the financial crisis hit the world markets, GIC and GDF Suez stood by their commitments in extremely adverse conditions.

"We committed considerable resources and were determined to see this project completed on schedule. We are grateful to the government of Bahrain for its support and businesslike approach."

A syndicate of 20 international and regional commercial and Islamic banks, in addition to the Export-Import Bank of the US, is participating in the $1.6bn loan.

US EXIM is expected to contribute $229m to the financing once its contribution has been approved by the US Congress.

The Korean Export Insurance Company provided commercial and political risk cover for part of the financing.

The banking syndicate is led by Calyon, Mashreqbank and Standard Chartered Bank. It includes Al Rajhi Banking & Investment Corporation, Arab Bank, Arab National Bank, Banque Saudi Fransi, Bayerische Landesbank (London branch), Credit Industriel et Commercial (London branch), Dexia Credit Local, Export Development Canada, Fortis Bank, HSBC Bank, KBC Bank (Dublin branch), KFW IPEX-Bank, National Australia Bank, SociAtA GAnArale, Bank of Tokyo-Mitsubishi UFJ, The Islamic Bank of Asia and WESTLB (London branch).

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