Oman’s largest PV project bags financial close despite COVID-19

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OPWP awarded project development rights for the Ibri II plant to the Acwa-lead consortium in March last year. Credit: ACWA Power

A consortium including Saudi firm ACWA Power, Gulf Investment Corporation (GIC) and Alternative Energy Projects Co. (AEPC) has achieved financial closure for a 500MWac solar system in Oman in spite of the COVID-19 outbreak.

The US$400 million plant located at Ibri – the largest PV project in the Sultanate – will be funded on a debt to equity ratio of 70:30. A syndicate of six international and local lenders will provide US$275 million in senior debt. These banks include Asian Infrastructure Investment Bank (AIIB), Bank Muscat, Riyad Bank, Siemens Bank, Standard Chartered Bank and Warba Bank.

The Oman Power and Water Procurement Company (OPWP) awarded project development rights for the Ibri II plant to the Acwa-lead consortium in March last year. The winners prevailed over two consortia led by Japan’s Marubeni and Abu Dhabi’s Masdar.

ACWA Power executives praised all parties involved in the financing deal for reaching close in spite of the global upheaval caused by the coronavirus.

“Successfully achieving financial closure during these challenging times is a testament to the determination of all the stakeholders in this project to keep doing the best we can within the constraints we all need to work within,” said Paddy Padmanathan, CEO of ACWA Power.

Oman is also a key country for ACWA Power’s Middle East operations, said Rajit Nanda, the company’s chief investment officer – adding: “Achievement of this milestone together with our partners – co-shareholders, contractors and the bank group comprising of international and local banks – notwithstanding the trying financial and macroeconomic challenges prevalent the world over resulting from the COVID-19 outbreak demonstrates our structuring capabilities, the resilience of our long-lasting partnerships and our commitment to OPWP.”

The deal brings good news for the progress of renewables shortly after the International Energy Agency (IEA) stated that the crash of oil prices as the global coronavirus crisis intensifies may challenge the plans by oil and gas (O&G) giants to finance a shift to renewables.

The Ibri II project will be developed on a build, own, operate (BOO) basis and will supply power under a 15-year offtake agreement. It will be able to supply power to an estimated 33,000 homes at peak generation capacity.

The deal is also the first renewable energy financing in Oman by AIIB, the Beijing-headquartered international multilateral development bank.

In July last year, OPWP kicked off the tendering process for two independent power projects (IPP), with a combined output of 1.1GW. The Manah Solar I IPP solar facility and the Manah Solar II IPP are planned 95 miles southwest of Oman’s capital Muscat. 

OPWP hopes to add a total of 5GW of solar capacity by the end of 2024.

PV Tech has set up a tracker to map out how the COVID-19 pandemic is disrupting solar supply chains worldwide. You can read the latest updates here.

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