The $1.1 billion Disi-Mudawarra to Amman water conveyance system had been discussed in various guises since the 1990's. Following the tender process instigated by the Government of Jordan, Turkey's Gama Enerji (a joint venture between GAMA Holding and GE Energy Financial Services) won the bid in December 2006 and had a long and challenging path to financial close which was eventually reached in June 2009.

The project is the largest privately financed water supply project in Jordan and the surrounding countries, and it is much needed, Jordan is one of the most water starved countries in the world.

Gama Enerji and its financial adviser, Arab Banking Corporation, had originally sounded out commercial banks about lending into the project but it became clear in early 2007 that commercial banks could not lend enough at long tenors, and those that were willing were not reasonably priced.

The project initially progressed with three multilaterals – IFC, OPIC and Proparco. However, while a condition of IFC's participation was that it would syndicate some of its debt to commercial banks, which at first seemed like a good fit, the lack of appetite for secondary market debt meant that the IFC withdrew from the financing around eight months before close and was replaced by the EIB.

The three initial multilaterals – OPIC, EIB and Proparco – raised $475 million of project debt for the scheme with tenors in excess of 20 years, a first for Jordan, especially in the water sector. The sponsors are investing around $196 million in the project, with the remaining $300 million provided by grants from the Government of Jordan backed by loans from the EIB and Agence Française de Développement. The first tranche of debt was disbursed on 8 July 2009. There is also a $100 million stand-by facility for steel price indexation.

The Disi transaction is the largest financing closed for any private sector project in Jordan, a testament to all involved. The financing overcame several sizeable challenges: cross boundary issues, the withdrawal of the IFC and the financial turmoil faced in 2009. As a notable innovation, the deal featured a fully flexible synthetic interest rate swap arrangement entered into between the project company and the government, providing the government the ability to manage its interest rate risk while also providing the lenders the comfort they required.

The scheme involves pumping water from an aquifer in Southern Jordan near the Saudi border around 600 metres underground through a 325km pipeline to two reservoirs in Amman. The BOT concession is for 25 years and the government is the offtaker on a take-or-pay basis. The conveyance system is to be designed to supply 100 million m3/year of Disi water for a period of 50 years.

Construction is envisaged to be completed in the first half of 2013 by the Turkish contractor, Gama Power Systems Engineering and Contracting, the contracting arm of GAMA Holding. Suez Environment will operate and maintain the facilities for 25 years, after which they will be transferred back to the Jordanian Ministry of Water and Irrigation.

The project is important in terms of humanitarian need – Jordan is regularly in the top three countries in the world in terms of water scarcity. Once the facilities are completed, the water delivered to Amman will provide 6% of Jordan's total water requirements.

Disi-Mudawarra to Amman Water Conveyance System
Status: Financial close June 2009
Description: $475 million debt for a 325km water conveyance project to Greater Amman Area, Jordan
Sponsor: Gama Enerji
Lead arrangers: OPIC; Proparco and Agence Française de Développement; EIB
Sponsor financial adviser: Arab Banking Corporation
Government financial adviser: Hillgate
Government legal adviser: Manheimer
Government technical adviser: Sweco
Sponsor's legal adviser: Allen & Overy
Lenders' legal adviser: White & Case
Lenders' technical adviser: Mott MacDonald
Sponsor owner engineer: Halcrow
EPC contractor: Gama Power Systems Engineering and Contracting
EPC contractor's engineer: Dar Al-Handasah