The FINANCIAL — KfW IPEX-Bank in a consortium with other international banks and The Export-Import Bank of Korea signed financing agreements in excess of USD 1.3 billion for two Independent Power Projects (IPP), Sohar 2 and Barka 3, in Oman on 16 September.
"Both projects are modern, energy efficient, gas-fired combined-cycle plants and will be built by a construction consortium comprising Siemens AG, Germany and GS Engineering & Construction Company, Korea. The centrepieces of the plants, two high-efficiency gas turbines each, will be supplied from Germany," KfW says.
KfW IPEX-Bank will contribute around USD 380 million to the total investment volume as well as a part of the interest rate hedging. The bank is Mandated Lead Arranger and Euler-Hermes Coordination Bank of the financing agreement. This transaction marks the first involvement of the German ECA Euler-Hermes in the country’s project financed power sector. Euler-Hermes is providing comprehensive cover of more than USD 600 million for both projects.
Markus Scheer, Managing Director of KfW IPEX-Bank commented: “European and in particular German companies are global leaders in technologies for efficient power generation. If through this transaction we can help deploy this know-know outside of Europe as well, we will have fulfilled our mission twice by supporting the export economy and contributing to global climate protection at the same time."
The projects were awarded to a consortium led by GDF Suez S.A. following a competitive bidding scheme initiated by the Omani government in summer 2009, building on the successfully established IPP model in Oman and the wider Gulf region. The consortium will own and operate the plants, and all electricity generated will be sold to the Oman Power and Water Procurement Company for a period of 15 years. The 745 MW Sohar 2 power plant is located next to the expanding industrial park at Sohar, 240 km north-west of the Oman capital Muscat, while the nearly identical 745 MW Barka 3 power plant is situated only 85 km away from Muscat.
As part of the finance schemes, KfW IPEX-Bank will provide 17 year fixed interest rate loans on a CIRR basis (Commercial Interest Reference Rate), offering attractive financing conditions in support of exports of German power plant technology. The transactions mark the most recent milestone in KfW IPEX-Bank’s continued support of the region’s power sector spanning almost a decade.