Four banks, including Korea Development Bank, Standard Chartered Bank, and the Saudi-based National Commercial Bank and Riyadh Bank will provide financing that includes an 80% senior debt for Saudi Arabia’s Yanbu 4 independent water project (IWP).
The developer team led by France’s Engie reached financial close on the project on 21 March, over a year since they were announced as the preferred bidder for the scheme.
In addition to the 450,000m³ per day (m³/d) seawater reverse osmosis (SWRO) plant, the project includes water storage tanks with an equivalent of two days’ operational capacity, a 20MW solar photovoltaic plant, and a 40km water transmission pipeline between Yanbu and Rayis.
The project will be implemented using a build, operate, own contract, with the water pipeline expected to be transferred after construction to the Saline Water Conversion Corporation.
The changing global market conditions and liquidity issues arising from the Covid-19 pandemic, along with the change in the project scope, affected the timeline for reaching financial close.
“The biggest challenge [towards reaching the financial close] was the additional scope of a 4km water pipeline,” explains Turki al-Shehri, CEO of Engie in Saudi Arabia.
This increased the estimated project budget from approximately $650m to $850m.
The integrated water project is expected to reach commercial operation in the fourth quarter of 2023.
Al-Shehri says the project execution will require very careful planning to ensure logistics are sourced from countries whose industries are not impacted by the Covid-19 pandemic.
In addition to being the kingdom’s first integrated water public-private partnership (PPP) project, the Yanbu 4 scheme has Saudisation targets of 40% during the construction phase, which will then increase to 70% in the commercial operation phase.
Engie says the project will create 500 direct and indirect full-time jobs and contribute SR1.5bn to the kingdom’s GDP.
The project’s developer team includes local firms Mowah and Nesma. Engie’s equity share in the project is 40% while Mowah and Nesma each account for 30%.
South Korea’s Doosan Heavy Industries will undertake the engineering, procurement and construction contract for the scheme.
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