Bank of China (Dubai Branch) contributes to a $225 million USD syndicated loan for the 300 MW Sakaka Solar Power Plant Project

Project narrative

On November 16, 2018, financial close was reached on a deal in which Natixis entered into a $225 million USD term loan agreement with Sakaka Solar Energy Company — a special purpose vehicle and joint venture of Saudi Arabia-based ACWA Power (70% equity stake) and Saudi Arabian conglomerate Al Gihaz Holding (30% equity stake) — for the 300 MW Sakaka Solar Power Plant Project. Then, prior to April 26, 2019, Natixis syndicated the $225 million USD term loan to the Zhejiang Branch and the Dubai Branch of the Bank of China (BOC) and Sumitomo Mitsui Banking Corporation (SMBC). The $225 million USD loan carried a maturity period of 26 years, a final maturity date of November 16, 2044, a repayment schedule beginning in November 2018, an initial interest rate of LIBOR plus 130 basis points (bps) to year six of the loan, with the margin rising to 260 bps to maturity, and had a soft mini-perm structure with a refinancing trigger at commercial-operations-date plus four years. BOC contributed $100 million USD to the loan syndicate. Natixis was the sole underwriter and initial mandated lead arranger. Arab National Bank (ANB) provided a separate equity bridge loan for the project. The proceeds of this loan were to be used by the borrower for the construction of a SAR 1.2 billion ($319 million USD) solar photovoltaic plant with a 300 MWac (405 MWp) capacity located on an area of about six square kilometers in Sakaka City in Al-Jawf Province, approximately six kilometers south of the Al Jouf Domestic Airport. The solar plant was expected to supply over 75,000 households with clean energy, offsetting 430,000 tons of carbon dioxide emissions annually (10.5 million tons over its lifetime). The project had a debt-to-equity ratio of 75:25. Sakaka was the first utility-scale photovoltaic plant developed under Saudi Arabia's National Renewable Energy Program (NREP). In April 2017, the Renewable Energy Project Development Office (REPDO) of the Ministry of Energy issued a request for proposal for a build-own-operate (BOO) concession for the solar project, the first independent power project (IPP) in Saudi Arabia. It received eight bids from international and regional renewable energy developers. In January 2018, REPDO awarded the concession to the ACWA Power-Al Gihaz consortium, its winning bid coming at $0.02343 USD per kWh. On February 14, 2018, Saudi Power Procurement Company (SPCC), a subsidiary of Saudi Electricity Company (SEC), signed a 25-year Power Purchase Agreement (PPA) for the project. Sakaka was framed as a foundation for the government's Saudi 2030 Vision to diversify its economy from oil production. A consortium of Mahindra Susten Private Limited & Chint Solar (Zheijang) Company Ltd was the engineering, procurement, and construction (EPC) contractor responsible for project implementation. Nextracker was contracted to to supply its solar trackers for the plant. Huawei Technologies Co., Ltd. was contracted to supply FusionSolar 1500V Smart PV Solution inverters, SUN2000-90KTL string inverters and a FusionSolar Smart PV Management System for the project. Diaa Sakaka Operation and Maintenance Company, a subsidiary of First National Operations & Maintenance (NOMAC), was contracted to provide operations and maintenance (O&M) for the plant upon completion. Construction began on February 12, 2018. The project was scheduled to enter commercial operations in August 2019. The project began initial operations by the end of 2019 and commercial operation in June 2020. The plant was officially inaugurated in April 2021.