Al Taweelah A1: the big one
The rapid swelling of Abu Dhabi's downstream industrial base and
its ever growing consumer population demand that the emirate shores
up its power generation and water desalination capacity ? fast.
This is a familiar maxim throughout the Gulf States which, until
recently, had scant experience with traditional project financing.
Abu Dhabi, however, is learning quickly, as evidenced by its latest
independent water and power project (IWPP),
Tractebel/TotalfinaElf's Al Taweelah A1 ? only the second such
project tendered to international developers in the United Arab
Emirates (UAE).
The deal, the largest of its kind in UAE at $1.3 billion, is backed by a $1 billion loan which was recently let loose on the market. Sub-underwriting and syndication are taking place concurrently. Despite a lengthy tenor (18.5 years), the loan has received strong interest. Co-leads are BNP Paribas and Citibank, which are currently courting a group of banks to join the arranging group. BNP Paribas' Francis Ballard explains, ?it was the quality of the sponsors that convinced the market that the deal warranted such a tenor. We worked hard to make sure it sticks to traditional project finance structures.?
The deal should reach financial close by November. Pricing is 110bp over Libor during construction and notches up to 125bp-145bp during operation. Fees are alleged to be 90bp for $100 million and 80bp for $75 million. BNP Paribas supported TotalFinaElf/Tractebel during the bidding, before bringing Citibank into the deal.
Bankers close to the deal claim the pricing is comfortable enough to sell the particularly bulky and drawn out loan ? but only just. Much of the deal's alleged appeal stems form the success of UAE's first IWPP deal ? last year's Al Taweelah A2 ? which itself lugged a 17-year tenor (despite Abu Dhabi's triple-A credit rating). The pricing on that deal (winner of Project Finance's 1999 Water/Power Deal of the Year) hit 105bp during the construction phase, ratcheting down to 80bp during operation. That deal, shouldered by sponsor CMS, took less than 12 months to attract an international team of lenders and jog towards financial close.
The progress of the A1, however, has been hampered by prolonged negotiations. The selection process for the project was drawn out by Abu Dhabi government demands for refurbished bid documents. The project initially entailed the rehabilitation of an existing 255MW cogeneration facility, estimated to cost $900 million. The Abu Dhabi Water and Electricity Authority (ADWEA), however, asked for modified bids to be submitted for a larger project, on a build, own, operate (BOO) basis, to meet revised demands ? the upgrade of the existing facility to 1,350MW, and the expansion of water capacity from 29 million g/day to 40 million g/day. ADWEA asked bidders to match the prices of the earlier project ? $0.0244 /kWh.
TotalFinaElf/Tractebel and CMS Energy were the final two listed bidders and there were rumours in March that CMS would secure the concession. But TotalFinaElf/ Tractebel won the race, and the alliance will take a 40% stake in the project, with ADWEA holding the remaining 60%.
The revamping of the existing, 11-year old plant is expected to be completed by Spring, 2002, and the new IWPP should be finished by April, 2003. The cost includes a $283 million payment by the consortium for its 40% share of the existing plant.
According to the revised documents, power will be sold at $0.0244/kWh. Gas will be supplied by the Abu Dhabi National Oil company.
The offtake arrangement calls for ADWEA to purchase power and water from the plant for 20 years [re-check this], with payment to the project company on an availability, rather than dispatch, basis.
The completed plant is slated to supply about 25% of the country's power and water needs. ADWEA plans to increase total electricity output from the present level of 2,500MW to 7,536 MW by 2010. Additionally, desalinated water production is set to rise from 262 million g/day to 573 million g/day over the same period. This will be distributed throughout the emirate by a reinforced 400kV transmission network. Contract awards are also imminent for a new substation at Musaffah, the extension of an existing substation at Taweelah, and the extension of the 220kV substation also at Musaffah.
Next to slide into the market will be the $400 million Shuweihat IWPP deal. The four teams reportedly poised for the forthcoming final bids are AES, CMS/International Power, Marubeni/PSEG and TotalFinaElf/Tractebel. The tendering process for this third IWPP, 250km west of Abu Dhabi city, has already been delayed by the A1 holdup. All the more important, then, that the A1 sells successfully ? and soon.
The expansion of the UAE's manufacturing sector is urging a similar development of utility capacity in the neighboring emirate Dubai. The Dubai Electricity and Water Authority (DEWA) saw demand rise in 1999 by 13% for water and 16.3% for electricity.
Electricity demand peaked at 2,124MW, well within the emirate's 2,600MW capacity. But water demand peaked at 97% of capacity. Accordingly, Dubai has put forth proposals to expand its Jebel Ali K station, boosting its capacity by an additional 400MW abd 5.72 million g/day by next summer, with a view to even more expansion in the long term.
The deal, the largest of its kind in UAE at $1.3 billion, is backed by a $1 billion loan which was recently let loose on the market. Sub-underwriting and syndication are taking place concurrently. Despite a lengthy tenor (18.5 years), the loan has received strong interest. Co-leads are BNP Paribas and Citibank, which are currently courting a group of banks to join the arranging group. BNP Paribas' Francis Ballard explains, ?it was the quality of the sponsors that convinced the market that the deal warranted such a tenor. We worked hard to make sure it sticks to traditional project finance structures.?
The deal should reach financial close by November. Pricing is 110bp over Libor during construction and notches up to 125bp-145bp during operation. Fees are alleged to be 90bp for $100 million and 80bp for $75 million. BNP Paribas supported TotalFinaElf/Tractebel during the bidding, before bringing Citibank into the deal.
Bankers close to the deal claim the pricing is comfortable enough to sell the particularly bulky and drawn out loan ? but only just. Much of the deal's alleged appeal stems form the success of UAE's first IWPP deal ? last year's Al Taweelah A2 ? which itself lugged a 17-year tenor (despite Abu Dhabi's triple-A credit rating). The pricing on that deal (winner of Project Finance's 1999 Water/Power Deal of the Year) hit 105bp during the construction phase, ratcheting down to 80bp during operation. That deal, shouldered by sponsor CMS, took less than 12 months to attract an international team of lenders and jog towards financial close.
The progress of the A1, however, has been hampered by prolonged negotiations. The selection process for the project was drawn out by Abu Dhabi government demands for refurbished bid documents. The project initially entailed the rehabilitation of an existing 255MW cogeneration facility, estimated to cost $900 million. The Abu Dhabi Water and Electricity Authority (ADWEA), however, asked for modified bids to be submitted for a larger project, on a build, own, operate (BOO) basis, to meet revised demands ? the upgrade of the existing facility to 1,350MW, and the expansion of water capacity from 29 million g/day to 40 million g/day. ADWEA asked bidders to match the prices of the earlier project ? $0.0244 /kWh.
TotalFinaElf/Tractebel and CMS Energy were the final two listed bidders and there were rumours in March that CMS would secure the concession. But TotalFinaElf/ Tractebel won the race, and the alliance will take a 40% stake in the project, with ADWEA holding the remaining 60%.
The revamping of the existing, 11-year old plant is expected to be completed by Spring, 2002, and the new IWPP should be finished by April, 2003. The cost includes a $283 million payment by the consortium for its 40% share of the existing plant.
According to the revised documents, power will be sold at $0.0244/kWh. Gas will be supplied by the Abu Dhabi National Oil company.
The offtake arrangement calls for ADWEA to purchase power and water from the plant for 20 years [re-check this], with payment to the project company on an availability, rather than dispatch, basis.
The completed plant is slated to supply about 25% of the country's power and water needs. ADWEA plans to increase total electricity output from the present level of 2,500MW to 7,536 MW by 2010. Additionally, desalinated water production is set to rise from 262 million g/day to 573 million g/day over the same period. This will be distributed throughout the emirate by a reinforced 400kV transmission network. Contract awards are also imminent for a new substation at Musaffah, the extension of an existing substation at Taweelah, and the extension of the 220kV substation also at Musaffah.
Next to slide into the market will be the $400 million Shuweihat IWPP deal. The four teams reportedly poised for the forthcoming final bids are AES, CMS/International Power, Marubeni/PSEG and TotalFinaElf/Tractebel. The tendering process for this third IWPP, 250km west of Abu Dhabi city, has already been delayed by the A1 holdup. All the more important, then, that the A1 sells successfully ? and soon.
The expansion of the UAE's manufacturing sector is urging a similar development of utility capacity in the neighboring emirate Dubai. The Dubai Electricity and Water Authority (DEWA) saw demand rise in 1999 by 13% for water and 16.3% for electricity.
Electricity demand peaked at 2,124MW, well within the emirate's 2,600MW capacity. But water demand peaked at 97% of capacity. Accordingly, Dubai has put forth proposals to expand its Jebel Ali K station, boosting its capacity by an additional 400MW abd 5.72 million g/day by next summer, with a view to even more expansion in the long term.
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