A consortium led by Saudi Arabia’s Acwa Power and comprising Saudi Brothers Commercial Co (SBCC) has signed senior financing and hedging agreements for the $700m (SAR2.6m) Rabigh 3 Independent Water Project (IWP), one of the world’s largest seawater reverse-osmosis (SWRO) projects, in Saudi Arabia.
The transaction is financed through a limited recourse ring-fenced project financing agreement, with Natixis, MUFG, Samba, and Riyad Bank involved as initial mandated lead arrangers.
Riyad Bank has also provided an equity bridge loan for the transaction. Water and Electricity Company (WEC) is involved as project off-taker, and had awarded Acwa Power Consortium the Rabigh 3 contract in November 2018.
Acwa Power and SBCC respectively hold 70% and 30% of Rabigh Three Company, a firm that will own the IWP in Rabigh.
WEC issued the project's request for proposals early in 2018, and the win by Acwa Power Consortium came after the team offered a “then world-record tariff of US cents 0.53/m3”. In December 2018, Acwa Power revealed it had overtaken 55 expressions of interest and four other bidders to win the project.
Sepco III (Power China), Abengoa, and Sidem (Veolia) are building the project as a consortium under an engineering, procurement, and construction contract. Rabigh Water Production Services Co, an affiliate of First National Operations and Maintenance Co, or Nomac, has won an operations and maintenance contract for Rabigh 3 IWP.
The plant’s operational commencement is scheduled for the end of 2021, and following its launch, the project will serve water demand in Makkah al-Mukarramah and Jeddah, particularly during peak periods such as the Holy Month of Ramadan and Hajj.
Additionally, Acwa Power explained, Rabigh 3 will “create new employment opportunities in fields [such as] construction, operations, and maintenance”, and boost local competencies in Saudi Arabia.
Acwa Power, in which Saudi Arabia’s Crown Prince HRH Mohammed Bin Salman-led Public Investment Fund holds a stake, said Rabigh 3 IWP will generate 600,000m3 of water per day.
A water purchase agreement for Rabigh 3 IWP was signed in December 2018 by the kingdom’s Minister of Environment, Water and Agriculture, and chairman of WEC, HE Eng Abdulrahman bin Abdulmohsen Al-Fadley.
Commenting on the funding agreement, Acwa Power’s president and chief executive officer, Paddy Padmanathan, said Rabigh 3’s model would be of interest across the region as stakeholders embark on “an extensive desalination capacity procurement programme”.
“We are proud to have closed Rabigh 3 as a demonstrator for how the recent price and technology evolution in reverse-osmosis desalination has made this an affordable and efficient solution for potable water production for countries around the region,” Padmanathan added.