US$1bn Salalah IWPP nears financial close
Move could signal start of project finance thaw
The long-running saga of the US$1 billion Salalah IWPP appears to be coming to a close, after Singapore's Sembcorp, the initial preferred bidder on the project, claimed it had lined up the financing for the deal.
"The financing is now in place, with all the banks lined up", a source close to the deal told The Business Times newspaper.
The firm regained preferred bidder status in June after Oman Power & Water Procurement Company went back to the second- and third-ranked consortiums as a result of Sembcorp’s decision to ask the GCC utility to provide more money for the deal.
The Salalah IWPP, which is now behind schedule, will produce 400MW of power and as well as 15 million gallons per day of desalinated water.
"The thaw in the project finance market now is becoming evident—it has also reached the periphery of the Gulf-region market, where Salalah is located both physically and business-wise (as financial risk after all is higher in Oman than in Abu Dhabi or Qatar, which hitherto have seen more of the project finance thaw)," said IHS Global Insight analyst Samuel Ciszuk.
"It is increasingly apparent that Middle Eastern actors, together with Asian players (Standard Chartered, despite its U.K. base, straddles the former two categories), are gaining market shares in the project finance market, thanks to improved oil prices, in place of some formerly dominating European and U.S. financial institutions."