Middle East Water Deal of the Year 2003
Awarded by the Jordanian Ministry of Water and Irrigation, the 25-year BOT (build-operate-transfer) concession - including a three-year construction period - is sponsored by Samra Wastewater Treatment Plant Company Ltd (SPC) whose shareholders are the Suez Group (total 50%) [acting through Suez Environnement (20%) and ONDEO Degramont Inc (30%)] and the Morganti Group Inc (50%).
Originally tendered in 2000, HSBC acted as financial adviser to the sponsors on a package that comprises both grants and a commercial loan. The total project cost of $169.5 million will be funded through a mix of equity ($17.5 million), a commercial loan ($60 million), and grants from USAID ($78 million) and from the Ministry of Water and Irrigation ($14 million). The Swedish International Development Agency also contributed $5 million in technical assistance to the project.
Under the BOT contract, the consortium is responsible for the design, construction and operation of the plant and the upgrade of the neighbouring Ain Ghazal pre-treatment plant.
The commercial loan, denominated in Jordanian dinars, has a 15-year maximum maturity and is granted by a syndicate of Jordan-based banks led by Arab Bank.
The participants are the Social Security Corporation of Jordan; Housing Bank for Trade & Finance; Jordan Kuwait Bank; Arab Banking Corporation (Jordan); HSBC Bank Middle East; Export & Finance Bank; Industrial Development Bank; Jordan Bank for Investment & Finance; the Arab Investment Bank. Ticket sizes range from $1 million to $11 million.
Pricing on the loan is fixed at 7.6% during the construction phase. Once the project enters the operational phase the loan will switch to a variable rate based on six-month Jordanian treasury bills. The security package includes a guarantee from the ministry of finance for the payment obligations of the ministry of water and irrigation and an interest rate compensation undertaking.
In addition to being the first PPP in Jordan, the project is also the first PPP with USAID participation. According to the ministry of water and irrigation, the USAID grant will keep the cost of treated water from the plant at the market price of JD0.3 ($0.42) per metre for quantities less than 30 cubic metres per quarter, and JD0.5 per metres for quantities above 30 cubic metres.
The new plant will handle 267,000 cubic metres of wastewater daily and will treat 80% of Jordan's wastewater. The treated water will be used for irrigation and is expected to generate annual revenues of $15 million throughout the period of the concession.
Samra Wastewater Treatment
Plant Company
Status: closed 10 December 2003
Description: first Jordanian water BOT project
Debt: $60 million
Financial advisor to sponsors: HSBC
Lead arranger: Arab Bank
Participant banks: Social Security Corporation of Jordan; Housing Bank for Trade & Finance; Jordan Kuwait Bank; Arab Banking Corporation (Jordan); HSBC Bank Middle East; Export & Finance Bank; Industrial Development Bank; Jordan Bank for Investment & Finance; Arab Investment Bank
Legal counsel to the lenders: Latham & Watkins; Nabulsi & Associates
Legal counsel to the sponsors: Freshfields Bruckhaus Deringer; Ali Sharif Zu'bai & Sharif Ali Zu'bai law office
Legal counsel to the government: Mannheimer Swartling
Financial advisory to the government: SEK Advisory Services
Project advisory to the sponsors: Mapstone
Project management and technical: Sweco International
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