Narrative
Full Description
Project narrative
On December 11, 2016, financial close was achieved on the 2400 MW Hassyan Coal‐Fired Power Plant Phase 1 Project. To finance this project, a syndicate of banks — including the DIFC (Dubai) Branch of the Agricultural Bank of China, the Dubai Branch of Bank of China (BOC), the Heilongjiang Branch of BOC, the DIFC (Dubai) Branch of China Construction Bank Corporation (CCB), the Singapore Branch of CCB, the Harbin Dongli Subbranch of CCB, and the Industrial and Commercial Bank of China (ICBC) — participated in a syndicated a SAR 8,480,000,000 ($2,260,240,544 USD) senior loan facility, and a $118,000,000 USD (SAR 442,542,480) senior mezzanine facility to Hassyan Energy Phase 1 PSC (also known as Hassyan Energy Phase 1 P.S.C) — a special purpose vehicle (SPV) — for the 2400 MW Hassyan Coal‐Fired Power Plant Phase 1 Project. As part of this senior loan facility, the Dubai, London, and Heilongjiang Branches of BOC approved a $1.119 billion USD loan (captured via Record ID#90033). The estimated contributions ($475,516,890 USD) of the other Chinese state-owned banks — ICBC, Agricultural Bank of China, and CCB and their branches — are captured elsewhere, via Record ID#89744 for ICBC, Record ID#92466 for CCB, and Record ID#92467 for the Agricultural Bank of China. The senior loan facility carried an interest rate of LIBOR plus a 2.1% margin, a maturity period of 25 years, and a grace period of five years. The final maturity date of the senior loan facility is February 28, 2041. The loan was repayable beginning from August 31, 2021 until February 28, 2041. The senior mezzanine facility carried an interest rate of 6.5% and a maturity of seven years. The loan was repayable beginning from May 31, 2041 until February 29, 2048. The borrower’s repayment obligations are secured by (i.e. collateralized against), amongst other things, the project land, certain project accounts, the power plant and equipment, intellectual property, insurance proceeds and shares in the project company (Hassyan Energy Phase 1 P.S.C). In addition to ICBC, BOC, CCB, and Agricultural Bank of China, the following lenders participated in these facilities: First Gulf Bank PJSC (FGB), HYDB INC, the Saudi National Commercial Bank (NCB); Standard Chartered Bank (Hong Kong) Limited; Union National Bank PJSC (UNB); Commercial Bank International P.S.C.; and Emirates NBD Bank PJSC. Additionally, the London Branch of BOC served as an offshore account bank and BOCG Insurance served as a reinsurer of the project. Hassyan Energy Phase 1 PSC (or Hassyan Energy Phase 1 P.S.C) is a SPV and joint venture of ACWA Power Harbin Holding Company (49% ownership stake) and Dubai Electricity & Water Authority (DEWA) (51% ownership stake). ACWA Power Harbin Holding Company is a joint venture of Saudi Arabia's ACWA Power, China's Harbin Electric, and the Silk Road Fund. Through ACWA Power Harbin Holding Company, ACWA Power, Harbin Electric and the Silk Road hold 26.95%, 14.7%, and 7.35% ownership stakes in Hassyan Energy Phase 1 P.S.C, respectively. Harbin Electric and the Silk Road Fund reportedly provided $67.73 million USD and $34.33 million USD equity contributions, respectively. The 2400 MW Hassyan Coal‐Fired Power Plant Phase 1 Project sought to construct a 2.4GW ultra-supercritical (USC) power plant in Saih Shuaib, Dubai, the first coal-fired power project in the Gulf Cooperation Council (GCC) region. The plant was comprised of four ultra-supercritical coal-fired generating units with a capacity of 600 MW each, equipped with an ultra-supercritical boiler, steam turbine, and a generator from General Electric. The USC technology was designed to enable power generation at a relatively higher steam temperatures and pressures than conventional coal plants, leading to lower operating costs and stack-emissions. The plant was to be equipped with advanced electrostatic precipitators (ESP) and a seawater flue gas desulphurization (SWFGD) system to reduce the plant's NOx, SOx, and particulate emissions. Designs for the plant also left room to accommodate future carbon capture technology. The plant was originally intended to have a total generating capacity of 3.6GW, but DEWA halted the tender for the remaining 1.2 GW in November 2018. The project also included the construction of an on-site 400 kV substation to feed electricity generated by the power plant into the existing 400kV electricity transmission network, an offshore floating coal handling facility equipped with barges for coal transshipment, an onshore jetty for coal and ash, and an onshore coal bulk handling facility with an accompanying coal storage facility suitable for 45 days of storage. Under a contract awarded in October 2015, Louis Dreyfus Ports and Logistics committed to managing the coal handling and transshipment facilities for the power plant. To meet its coal needs, a long-term supply agreement for the import of coal from France's EDF Trading was struck. The Hassyan plant was expected to generate enough electricity to power about 250,000 households and expand Dubai’s grid capacity by 25%. The coal plant was designed to comply with emissions, environmental international standards, and fuel gas emissions — a stricter standard than emission limits in the Industrial Emissions Directive (IED) of the European Union or in the guidelines of the International Finance Corporation (IFC). It was also expected to contribute to the realization Dubai Clean Energy Strategy 2050, which sought to create a more environmentally friendly energy mix for Dubai with 25% from solar energy, 7% from nuclear power, 7% from clean coal, and 61% from gas by 2030. Chinese President Xi Jinping, during his visit to the Middle East in January 2016, identified 2400 MW Hassyan Coal‐Fired Power Plant Phase 1 Project as a particularly important project for the Belt and Road Initiative (BRI). On June 26, 2016, Hassyan Energy Phase 1 P.S.C awarded the lump sum turnkey engineering, procurement, and construction (EPC) contract to consortium made up of General Electric International Inc. and Harbin Electric International Company Limited. The approximate value of the project is SAR 12,140,000,000, and the value of EPC contract ranges between 70% to 90% of the total project cost. Alstom Power, which was acquired by GE in 2015, received the contract for the supply of the boiler, the steam turbine generator, and advanced environmental control systems. In August 2018, GE awarded a subcontract for steel fabrication works and the fabrication of the boiler support system for the four 600 MW units to Huaye Steel Structure (HYSS). NOMAC, a wholly owned subsidiary of ACWA Power, was the operations and maintenance services (O&M) provider for the project. Consolidated Contractors Company (CCC) and Nepti contracted ACES-Dubai for the preparation of the geotechnical study. CCCC Second Harbor Consultants Co., Ltd. (CTESI), was responsible for construction of the terminal and water intake and outfall work at the plant. China Harbor Engineering Company Ltd. (CHEC) was a subcontractor responsible for the construction of the jetty. Xiamen Shipbuilding Industry Co., Ltd. was responsible for the construction of barges for the project. China Energy Engineering Group Tianjin Electric Power Construction Co., Ltd. (TEPC), Northeast Electric Power Design Institute, and China State Construction all served as subcontractors. SinoPro supplied U channel tubes, couplers, white wood, and rebar for the plant. CCCC First Harbor Engineering Company, China Construction Science and Industry Corporation, and China Construction Third Engineering Bureau Co., Ltd. also served as subcontractors. The plant was developed on a build-own-operate (BOO) basis under the independent power producer (IPP) model. In 2016, ACWA Power Harbin Holding Company and DEWA signed a Purchase Power Agreement (PPA) to enter into a 25-year contract to supply the 2400 MW of electricity produced by the plant to DEWA at a levelized tariff of less than 5 US Cents per kWh. Phase 1 of the project consisted of the construction of the four 600 MW units, which were respectively be operational in March 2020, March 2021, March 2022, and March 2023. On October 23, 2017, a ceremony for the installation of the steel structure of the plant was held of Dubai’s Hassyan 4x600MW Clean Coal-fired Project contracted by HEI was held. During implementation, in 2018, a fall at Hassyan resulted in a fatality. In 2019, another fatality occurred due to a drowning. The outbreak of the COVID-19 pandemic also interfered with implementation, leading to quarantine and protective measures for the construction workers. Unit 1 was first synchronized with the grid on May 18, 2020. Unit 2 was synchronized with the grid on May 3, 2021. Unit 3 was synchronized with the grid on November 5, 2021. Then, in February 2022, DEWA and ACWA Power Harbin Holding Company agreed to convert the 2400 MW Hassyan Coal‐Fired Power Plant to natural gas for environmental reasons. Unit 4 was completed on January 24, 2023.
Staff comments
1. The Chinese project title is 迪拜哈翔4×600MW清洁燃煤电厂项目. The Arabic project title is محطة حصيان لتوليد الطاقة بالفحم النظيف . This project is also known as the Dubai Hassyan 4X600MW Clean Coal Power Plant. 2. In mezzanine finance, creditors are only able to claim against the company if it defaults, and only after creditors with senior debt have been repaid. 3. It is not clear how much funding from Chinese state-owned banks was allocated for the senior loan facility and how much funding from Chinese state-owned banks was allocated for the senior mezzanine facility. As such, AidData has created a single project record for the time being that only records the borrowing terms for the senior loan facility. 4. The all-in interest rate (3.406%) was estimated by adding 2.1% to the average 6-month LIBOR rate in December 2016 (1.306%). 5. The Dubai Electricity and Water Authority (DEWA) (هيئة كهرباء ومياه دبي) is a public service (government-owned) infrastructure company that was founded on January 1, 1992 by Sheikh Maktoum bin Rashid Al Maktoum. 6. Hassyan Energy Phase 1 P.S.C (“Hassyan”) entered into a common terms agreement with certain financial institutions on September 19, 2016 (the “Hassyan CTA”), as well as related financing documents (together, the “Hassyan Finance Documents”). The Hassyan CTA provides the framework governing a number of separately documented financing facilities, including a term loan commercial facility, a mezzanine facility, a working capital facility and a facility for funding scheduled liabilities service for each six-month period following the completion date and each repayment date falling on or prior to the final maturity date, that were obtained for the purposes of financing the Hassyan Independent Power Project (IPP). The Hassyan Finance Documents include standard representations and covenants by Hassyan, including covenants relating to maintaining certain financial ratios, the non-disposal of assets, non-incurrence of financial indebtedness (other than for certain exclusions), the making of distributions, hedging requirements and requiring project revenues to be paid into specified project accounts secured in favor of Hassyan’s financiers, together with events of default relating to Hassyan equity obligors and major project parties. The obligations of Hassyan under the Hassyan CTA are secured against, amongst other things, the project land, certain project accounts, plant and equipment, intellectual property, insurance proceeds and shares in Hassyan. The financiers are entitled to enforce their security if there is an event of default under the financing documents which is continuing. This may lead to the project sponsors/shareholders losing all or part of their investment in the project (see pg.605 of "Acwa Power Prospectus"). 7. "《金融时报》：强化全球金融服务能力 建行发力“一带一路”建设" and "Hassyan coal-fired to switch to gas" suggest the loan agreement was signed in September 2016 (the former suggests September 9; the latter suggests September 11). However, as financial close was unequivocally reached on December 11, 2016, AidData has coded this as the commitment date. 8. According to pg.605, "Acwa Power Prospectus", which is dated on June 30, 2021, the following institutions were lenders to the loan facility: the DIFC Branch of Agricultural Bank of China, the Dubai Branch of BOC, the Heilongjiang Branch of BOC, the DIFC Branch of CCB, the Harbin Dongli Subbranch of CCB, First Abu Dhabi Bank PJSC, HYDB INC, ICBC, the Saudi National Commercial Bank (NCB), Standard Chartered Bank (Hong Kong) Limited, Abu Dhabi Commercial Bank PJSC, Commercial Bank International P.S.C., and Nanyang Commercial Bank (NCB). The role and contributions of these new lenders, which include additional Chinese lenders, is unknown. It is also unknown as to the reasons behind the absence of lenders at the time of financial closure, including Chinese lenders, from the lenders at the time of June 30, 2021. This may be an indication of refinancing or additional financing, but it is unknown. This issue merits further investigation. 9. The individual contributions of the 14 lenders (excluding the two BOC branches, which had a collective contribution of $1.119 billion USD) to the syndicated loan are unknown. For the time being, AidData has estimated the collective contributions ($475,516,890 USD) of ICBC, Agricultural Bank of China, and CCB and their branches by assuming that each of the remaining 12 lenders contributed an equal amount to the loan syndicate ($95,103,378.66 USD). 10. AidData sourced information that the Dubai Branch of BOC as a lead bank and worked with BOC's London Branch and Heilongjiang branch to approve a $1.119 billion USD credit facility for this project, according to a UAE Country Study hosted on Public Service of Go-Global of Department of Commerce of Guangdong Province that went offline shortly after AidData found it (http://com.gd.gov.cn/go/article.php?typeid=38&contentId=14578). Additionally, "Acwa Power Prospectus" did not identify the London Branch of BOC as a lender to this syndicated loan, but "“一带一路” 国别介绍 —— 迪拜" mentioned it as an offshore account bank. It is likely that this is the role BOC London filled, and why it was involved in approving the facility as stated by the Public Service of Go-Global of Guangdong's Department of Commerce.