Consortium reaches financial close for Dammam PPP sewage project
Dammam West independent sewage treatment plant (ISTP) will be financed through a combination of senior project financing debt and equity from shareholders. The plant will have an initial capacity of 200,000 cubic metres a day (cm/d) which which will be able to be expanded to 350,000 cm/d in the future
The international and local consortium awarded the contract to develop the Dammam West independent sewage treatment project (ISTP) has reached financial close for the $245m project.
Energy & Utilities reported in February that initial construction works had started on the Dammam West ISTP, which will have an initial capacity of 200,000 cm/d with a design that will allow expansion up to 350,000 cm/d in the future.
The Saudi Water Partnership Company (SWPC) awarded a consortium of Metito Group, Orascom Construction and the local Mowah the contract to develop the plant in January 2019 after receiving bids from seven groups in July 2018 under a competitive tendering process. The project will be developed under a build-own-operate-transfer (BOOT) model under a 25-year sewage treatment agreement (STA).
The consortium has formed a special-purpose vehicle (SPV) called Dammam West Company for Water to build and operate the plant.
The project will be funded a combination of senior project finance loans and equity contributions from shareholders. A total of $160m non-recourse financing for the project is being provided by a number of local and international banks including: National Commercial Bank (NCB), Sumitomo Mitsui Banking Corporation (SMBC) and Arab Petroleum Investment Corporation (Apicorp).
The contract to develop the plant in January 2019 after receiving bids from seven groups in July 2018 under a competitive tendering process. The project will be developed under a build-own-operate-transfer (BOOT) model under a 25-year sewage treatment agreement (STA).
SWPC’s obligations under the STA will be guaranteed by a credit support agreement from the Saudi government.
Covington & Burling were International legal advisers for the project sponsor, with Hatem Abbas Ghazzawi & Company providing local legal services for the sponsor. Synergy Consulting and Willis Towers Watson provided financial advisory and insurance advisory services for the sponsor respectively.
Allen & Over and Baker & Mckenzie Habib al-Mulla provided internationl and local legal advisory services to the lenders respectively, with INDECs Consulting providing the insurance advisory services for the lenders and ILF providing technical advisory services.
The Dammam West project is one of three ISTP projects which SWPC awarded contracts for in 2019.
In February last year, the client signed contracts with a consortium comprising local firms Power & Water Utility Company for Jubail, Al-Amwal al-Khaleejiah and France’s Veolia to develop the Jeddah Airport 2 ISTP. The Jeddah Airport 2 plant will have a capacity of 500,000 cubic metres a day (cm/d).
India/US-based Synergy was the financial adviser to the winning consortium.
In December last year, SWPC awarded a contract to a consortium of Spain’s Cobra Instalaciones y Servicios and local company Tawzea to develop the Taif ISTP.
The winning team had submitted the lowest tariff of SRhalala 107.9 ($cents2.87) a cubic metre during a competitive bidding process in August. The Taif ISTP will have a treatment capacity of 100,000 cubic metres a day (cm/d), and will be developed operated under a 25-year sewage treatment agreement.
Energy & Utilities recently reported that SWPC had prequalified six developers for the much larger 375,000 cm/d Medina 3 ISTP.
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