Narrative
Full Description
Project narrative
On March 21, 2019, financial close was achieved on the Fourth Phase of the Mohammed bin Rashid Al Maktoum Solar Park Project (700MW). To help finance this project, a syndicate of banks — including the DIFC (Dubai) Branch of the Agricultural Bank of China, the Industrial and Commercial Bank of China (ICBC), Bank of China (BOC) (acting through its Shanghai Branch and other branches), and the Shanghai Branch of China Everbright Bank Co., Ltd. — participated in $2,505,010,992.58 USD (SAR 9.394 billion) senior loan facility agreement with Noor Energy 1 P.S.C. — a special purpose vehicle (SPV) — for the Fourth Phase of the Mohammed bin Rashid Al Maktoum Solar Park Project (700MW). Noor Energy 1 P.S.C is an SPV and joint venture of the Dubai Electricity & Water Authority (DEWA) (51% ownership stake), Saudi Arabia's ACWA Power (24.99% ownership stake), and the Silk Road Fund (24.01% ownership stake) that is responsible for the Fourth Phase of the Mohammed bin Rashid Al Maktoum Solar Park Project. The senior loan facility had a final maturity date of December 22, 2043, which implies a maturity length of 24.75 years. In addition to the DIFC Branch of the Agricultural Bank of China, BOC, ICBC, and Shanghai Branch of China Everbright Bank, the following lenders participated in the senior loan facility: Natixis, Standard Chartered Bank, and Union National Bank PJSC (UNB). Natixis, Standard Chartered, and UNB's collective contribution was worth $828 million USD. Therefore, AidData assumes for the time being that the aggregate monetary value of the contributions from the four Chinese state-owned lenders was worth $1,677,010,992.58 USD. Record ID#87119 captures ICBC's contribution, Record ID#92469 (this project) captures BOC's contribution of $600 million USD, Record ID#92470 captures China Everbright Bank's contribution, and Record ID#92471 captures Agricultural Bank of China's contribution. The senior debt loan facility was structured on a long-term mini perm basis whereby if the debt was not refinanced by a target refinancing date, a cash sweep mechanism would kick in to reduce the tenor of the senior facilities in the base case. Standard Chartered Bank served as Intercreditor Agent, Offshore Security Trustee, Offshore Account Bank, and Documentation Bank while UNG served as an Onshore Security Agent and Onshore Account Bank. The borrower’s repayment obligations were secured by (i.e. collateralized against), amongst other things, the project land lease, certain project accounts, the power plant and equipment, intellectual property, insurance proceeds, and shares in Noor Energy 1 P.S.C held by ACWA Power Solar CSP Holding Ltd. The $4,293,460,979.41 USD project was financed with the $2,505,010,992.58 USD senior loan facility (referred to as tranche 1 or the ‘international tranche’), a $180,000,000 USD (SAR 675 million) mezzanine loan facility (referred to as tranche 2), and up to $1,608,449,986.83 USD (SAR 6,031,687,450.61) in equity commitments from the project sponsors (partially or wholly funded via a $1.5 billion USD equity bridge loan). The $180 million USD mezzanine facility had a final maturity date of December 22, 2045. The following lenders participated in the mezzanine loan facility: the Shanghai Pilot Free Trade Zone Branch of China Minsheng Banking Corp. Ltd. (CMBC), Commercial Bank International P.S.C., and Commercial Bank of Dubai P.S.C. (CBD). These loans reportedly carried an interest rate of LIBOR plus 200 basis points, rising to 330 basis points over LIBOR after nine years (including four years of construction). The difference between the two tranches is that the international tranche (tranche 1) was drawn first, starting after 16 months. The first drawdown on tranche 2 was scheduled to occur after 28 months. The first 15 months of construction were funded through an equity bridge loan. A syndicate of six banks — including the Dubai Branch of Bank of China (BOC) — provided a $1.5 billion USD equity bridge loan to wholly or partially finance the $1,608,449,986.83 USD (SAR 6,031,687,450.61) equity contribution from the project sponsor (ACWA Power), which on-lent the proceeds of the EBL to Noor Energy 1 P.S.C. In addition to the Dubai Branch of BOC, the following lenders participated in the syndicated loan: Commercial Bank of Dubai P.S.C. (CDB), Emirates NBD Bank PJSC, First Abu Dhabi Bank PJSC, Mashreqbank PSC (acting through Mashreq Al Islami – Islamic Banking Division), and Union National Bank PJSC (UNB). The contribution of the Dubai Branch of BOC to this loan is captured via Record ID#89991. This project sought to construct a solar power plant at the Mohammed bin Rashid Al Maktoum Solar Park in Saih Al-Dahal with a total of 950 MW capacity in the form of 100 MW from a 260-meter-tall Concentrated Solar Power (CSP) tower (the world's tallest), 600 MW from a CSP parabolic trough, and 250 MW from solar photovoltaic and thermal storage facilities capable of allowing of storing 15 hours' worth of power over 44 square kilometers. Upon completion, the project was expected to power 320,000 homes, reduce carbon emissions by 1.6 million tons per year, and provide energy 24/7. The project was originally intended to deliver 700 MW of energy before being expanding by an additional 250 MW. Once completed, this independent power project (IPP) was expected to be largest single-site concentrated solar power plant (thermo-solar power plant) in the world, as well one of the most advanced, making use of all available solar technologies: central tower, parabolic trough, and PV. The project was also intended to support the Dubai Clean Energy Strategy 2050, which sought to increase the share of clean energy in Dubai to 25% by 2030. It has been described as a model for the Belt and Road Initiative (BRI). The project was developed on a Build-Own-Operate (BOO) basis and its entire capacity was to be sold to DEWA under a 35-year Power Purchase Agreement (PPA) effective the Commercial Operation Date (COD), extendable afterwards through mutual agreement by DEWA and Noor Energy. In 2017, DEWA issued a request for bids for the development, financing, construction, operation, and maintenance of a 200 MW CSP plant based on Concentrated Tower (CT) technology with a minimum of 8 hours full load storage. ACWA Power led a consortium that submitted an enhanced alternative bid for a 700 MW CSP project (along with the base bid), which would utilize both CT and Parabolic Trough (PT) technology with thermal storage of up to 15 hours. Then, in September 2017, DEWA awarded a build-operate-transfer (BOT) contract for the 700 MW Noor Energy 1 CSP plant to a consortium of ACWA Power and Shanghai Electric in September 2017. The contract included a 35-year PPA through which DEWA would off-take electricity from the independent power producer (IPP) project at $0.073 USD per KWh. The project was then expanded to include an additional 250 MW of photovoltaic capacity, for an overall capacity of 950 MW. On April 15, 2018, Shanghai Electric Group Company Limited (SEGC) signed the engineering, procurement, and construction (EPC) contract for the project. Shanghai Electric Hongkong Co., Ltd., a subsidiary for SEGC, was responsible for engineering and procurement. ACWA Power's subsidiary, First National Operation and Maintenance Company (NOMAC), was responsible for the operations and maintenance (O&M) of the plant. Spain’s Abengoa and U.S. developer BrightSource were the respective technology providers for the parabolic trough and central tower plants. Advisian was appointed as the owner’s engineer for the project in July 2018. The first stage of the project was originally expected to be commissioned in the fourth quarter of 2020. The originally expected commercial operations date (COD) was December 22, 2022. The groundbreaking ceremony was held March 19, 2018. The Molten Salt Receiver (MSR) was built and assembled on top of the solar tower in June 2020. As of April 2021, the solar tower had achieved an 87% completion rate; the concrete part of the solar power tower was complete at a height of 222 meters and the pallets and tubes that transfer the molten salt inside the solar tower had also been completed. The project was inaugurated on or around December 8, 2023.
Staff comments
1. This project is also known as the Fourth Phase of the 700 MW MBRAMSP Project, Dubai 700MW CSP Phase IV of the Mohammed Bin Rashid Al Maktoum Solar Park, the DEWA IV IPP Project, or the Noor Energy 1 Hybrid Solar Facility Project. The Chinese project title is 迪拜马克图姆太阳能园四期700MW光热太阳能项目. 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. Noor Energy 1 P.S.C (or “Noor Energy 1”) entered into a common terms agreement (governed by English law) with certain financial institutions on January 31, 2019 (the “Noor Energy 1 CTA”), as well as related senior financing documents (together, the “Noor Energy 1 Finance Documents”). The Noor Energy 1 CTA provides the framework governing a number of separately documented financing facilities, including senior facilities and a working capital facility and a facility for funding a liabilities reserve account and an additional commission reserve account for scheduled debt service due during the six-month period ending on the first repayment date and for each six month period ending on each repayment date falling thereafter up to the final maturity date. There are, in addition, mezzanine facilities and equity bridge facilities through which Acwa Power is covering (amongst other things) contingency and equity obligations. The facilities were obtained for the purposes of financing the 900MW fifth phase of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai. The Noor Energy 1 Finance Documents include standard representations and covenants by Noor Energy 1 including covenants relating to 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 Noor Energy 1’s financiers, together with events of default relating to Noor Energy 1 equity obligors and major project parties. Nature of financing: The financing is provided on a limited recourse basis to an SPV in which the Company is an indirect shareholder. The obligations of Noor Energy 1 under the Noor Energy 1 CTA are secured against, amongst other things, the project land lease, certain project accounts, plant and equipment, intellectual property, insurance proceeds and shares in Noor Energy 1 held by ACWA Power Solar CSP Holding Ltd (the company through which Acwa Power holds its investment). 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.607 of "Acwa Power Prospectus"). 4. 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. 5. The Shanghai Branch of BOC, ICBC Standard Bank plc, CBD., Emirates NBD Bank PJSC, Natixis, and UNB participated in a senior hedge arrangement for this project (pg.608 of "Acwa Power Prospectus"). Further details are unknown. 6. AidData assumes for the time being that the aggregate monetary value of the contributions from the four Chinese state-owned lenders was worth $1,677,010,992.58 USD, and assumes that the Chinese banks equally contributed equally to this figure ($419,252,748.145 USD). However, it is known that Bank of China contributed $600 million USD. 7. ACWA Power Solar CSP Holding Ltd. is a United Arab Emirates-registered solar power holding company. Its shareholders are ACWA Power Global Services Ltd., part of Saudi Arabia's ACWA Power, and CVXF Inc., a Chinese state-owned fund and a subsidiary of Silk Road Fund.