A $1.7bn vote of trust.

SECURING a $1.7bn (BD640m) loan for the plant was a vote of confidence at a time of global financial turmoil, say the team who brokered the deal earlier this month.

The challenging global market conditions called for an innovative approach to sealing the financial deal, said Harnek Shoker, Bahrain representative for international law firm Freshfields Bruckhaus Dereinger.

"The project is the first of its kind to be concluded in the Gulf and constitutes a major step in the continuing development of Bahrain's infrastructure programme."

He said the firm also advised the government two years ago on the $738.2m sale of Al Hidd Water and Power Plant to a consortium of International Power, Sumitomo Corporation and SuezTractebal.

It was the first privatisation of a power and water generation asset in Bahrain.

"In 2005, we represented the government on the development of the 1000MW El Ezzel independent plant."

The loan is an eight-year mini-perm, the first time such a structure has been used to finance a Middle East power project.

'Perm' is short for permanent and mini-perm financing is something a developer would use until a project has been completed and starts producing income.

"The structure has facilitated bank lending in a climate where many are reluctant to offer long-term financing," he said.

The arranging banks are Calyon, Mashreqbank and Standard Chartered Bank.

The project has attracted support from international, regional and Islamic banks as well as export credit agencies and is the first major project financing to close in the Gulf this year.

Commitments were received from Al Rajhi, Arab National Bank, Arab Bank, Bank of Tokyo Mitsubishi UFJ, Banque Saudi Fransi, BayernLB, Calyon, CIC Credit Mutuel, Fortis, HSBC, KBC, KfW-Ipex, Mashreq, National Australian Bank, Riyad Bank, Societe Generale, Standard Chartered Bank and WestLB, the bankers said.

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