The Qatar Electricity and Water Company (QEWC) has signed a $450m finance documentation with a consortium of four local banks yesterday. The fund is for financing Qatar’s $500m RAF A2 Desalination Plant under construction at Ras Abu Fontas.
The consortium of banks comprise QNB Group, Barwa Bank, Masraf Al Rayan and Qatar Islamic Bank. “This signing ceremony secures the $450m bank financing for the desalination project currently under construction at the Ras Abu Fontas site and set to start operations in June 2015. The 36 million imperial gallons per day (MIGD) project represents 10 percent of Qatar national water production,” QEWC noted in a filing to Qatar Exchange yesterday.
QNB Group, as the lead arranger will provide a $162m conventional debt tranche, a $18m conventional standby facility as well as conventional interest rate hedging. QNB will also cover the transaction roles as Global and Conventional Facility Agent, Global Onshore and Offshore Security Trustee, Onshore and Off shore Account Bank and Coordinating and Documentation Bank.
Barwa Bank, Masraf Al Rayan and Qatar Islamic Bank as Islamic mandated lead arrangers will each provide $90m under an Islamic facility tranche totalling $270m as well as Islamic hedging. Additionally, Qatar Islamic Bank will act as Islamic Facility Agent and Islamic Security Trustee. The transaction will notably introduce for the first time in a project finance deal in Qatar a share of Islamic hedging under the form of a commodity-based Profit Rate Swap.
QEWC General Manager Fahad Al Mohannadi said: “RAF A2 is a strategic project to support sustainable growth for the Qatari economy. After the successful signing of the Water Purchase Agreement with Kahramaa in January this year, QEWC is pleased to see the strong support demonstrated by QNB, Barwa Bank, Masraf Al Rayan and Qatar Islamic Bank in achieving the final stage of the project development with the signing of the finance documentation today.”
QEWC Business Development Manager Khalid Jolo said: “The RAF A2 transaction represents a significant milestone in the Qatar history of project financing as, for the first time, a Qatari developer, a Qatari offtaker and four Qatari banks are joining forces to make this strategic project happen without any financing support from foreign banks.”
QNB General Manager, Group Corporate and Institution Banking, Abdulla Mubarak Al Khalifa said: “This project shows vital strategic importance for QEWC. With QNB’s expertise and long experience in arranging project financing, QNB was mandated by QEWC to lead the deal. We are pleased to be a strategic partner and to act as the Mandated Lead Arranger and Coordinating Bank in successfully arranging this milestone project financing transaction in Qatar.”
HSBC and Norton Rose Fulbright LLP are acting respectively as Financial and Legal Advisers to QEWC. Simmons & Simmons LLP are acting as Legal Adviser to the project financiers.