ICBC contributes $20 million to syndicated debt financing package for 50MW Al Subh Solar Power Project

Project narrative

On October 29, 2017, Al Subh Solar Power S.A.E. — a special purpose vehicle and joint venture of Acciona Energia Global [50% ownership stake] and ENARA Bahrain (a consortium consisting of Swicorp, KCC Corporation and the Shoaibi Holdings) [50% ownership stake] — signed a $66 million syndicated debt financing package with the International Finance Corporation (IFC), the Asian Infrastructure Investment Bank (AIIB), the Industrial and Commercial Bank of China (ICBC), and Europe Arab Bank (EAB). The participants in the syndicate accepted a streamlined, standardized, one-size-fits all, financing package with limited negotiation room in exchange for speed, certainty of execution and greatly reduced transaction costs by sharing data, pooling a single set of lender’s advisors, agents and account banks. The IFC provided a $12 million A loan and a $3.3 million C loan. EAB provided a $2 million B loan. ICBC provided a $20 million B loan (with an 18-year maturity and an unknown interest rate and grace period). AIIB provided a $15.5 million parallel loan. The borrower purchased a credit insurance policy from the Multilateral Investment Guarantee Agency (MIGA). The purpose of the project was to construct the 50MW Al Subh photovoltaic solar plant. The project consisted of a single axis tracking system of approximately 182,790 PV panels with a nominal capacity of 50 MW AC and a peak capacity of 59.4 MW DC. The project scope also included the construction by Egypt Electricity Transmission Company (EETC) of an approximately 1 km underground 22 kV transmission line connecting the project to substation 4 (SS4), the nearest of four EETC high voltage substations (on the southeastern corner of the Benban PV solar park). Power was to be sent to inverters and fed into the utility power grid system through the EETC substation. The power produced by Al Subh Solar Power S.A.E. was to be sold to EETC under a 25-year power purchase agreement. Water for the project was to be supplied by groundwater wells licensed by the Ministry of Water Resources and Irrigation (MWRI). Water distribution in the Benban PV solar park was to be managed by the Benban PV solar park’s facilities management company (FMC). The project site is located within Egypt’s New and Renewable Energy Agency (NREA)’s 37.2 km2 Benban 1.8 GW PV solar park comprising 39 separate PV plots, situated 12 km west of the nearest village (Benban), and 15 km west of the Nile River. It is 40 km northwest of Aswan city, in the Aswan Governorate of Upper Egypt. The project site occupies a 97-hectare plot (SBN 28-4) located in the fourth row within the southern area of the Benban PV solar park. TBEA Xinjiang SunOasis served as the Engineering, Procurement, and Construction (EPC) and Operations and Maintenance (O&M) contractor, while Astronergy was selected as the supplier of the PV modules. It was originally anticipated that approximately 500 workers would be employed at the project during construction, and 15 workers during operation, as well as 20 security personnel. EETC was responsible for the procurement and development of the project’s environmental and social assessments (ESIAs). IFC’s appraisal of the project consisted of two site visits to the Benban PV solar park on December 12, 2015 and on March 22, 2017; appraisal meetings in Cairo, Egypt from March 19-21, 2017; and finally a review of environmental and social (E&S) aspects through on-site interviews and review of ESHS documents provided. All meetings took place with the project sponsors and the EPC contractor. The EIA was expected to be submitted by end of May 2017. The findings of the Strategic Environmental and Social Assessment (SESA) non-technical summary commissioned by NREA for the Benban 1.8 GW PV Solar Park was issued in December 2015. It was also considered in the IFC review as were the conditions attached to this approval of the SESA on the March 17, 2016 by the Egyptian Environmental Affairs Agency (EEAA). Construction was originally expected to commence by November 2017. The Al Subh Solar Power Plant was ultimately commissioned and put into operation in October 2019.