Bank of China contributes to $750 million syndicated loan for 1.5GW Sirdarya Independent Power Project

In 2019, the Government of Uzbekistan initiated an energy sector reform plan which included key components such as unbundling the vertically integrated systems, tariff reforms and encouraging private investment in power generation. Then, in February 2020, the Government of Uzbekistan, with support from the International Finance Corporation (IFC), launched a tender-bidding to select an independent power producer to build, operate and own the Sirdarya project. ACWA Power signed three strategic agreements worth $2.5 billion, with Uzbekistan’s Ministry of Energy in March 2020. The agreements include a 25-year power purchase agreement (PPA) and investment deal for the development, construction and operation of the Sirdarya power plant, as well as the construction of two wind farms in the country. Then, on February 3, 2021, ACWA Power Sirdarya LLC — a special purpose vehicle that is wholly owned by ACWA Power — signed a set of senior syndicated loan agreements worth $750 million with a group of banks for the 1.5GW Sirdarya Independent Power Project. These loans are governed by a common terms agreement (CTA) and they carry a 17.75 year maturity (final maturity date: June 30, 2039) and an unknown interest rate. The loans are secured by (i.e. collateralized against) the project land lease, certain project accounts, the power plant and equipment, intellectual property, insurance proceeds, shares in Sirdarya, and shares in the 100% shareholder of Sirdarya (a DIFC entity called ACWA Power Uzbekistan Project Holding Company Ltd), amongst other things. The members of the loan syndicate are entitled to enforce their security if there is an event of default under the financing documents which is continuing. The transaction reached financial close on September 27, 2021. The members of the syndicate included Bank of China Limited Beijing Branch; Bank of China Dubai Branch; Bank of China Tokyo Branch; JSC AB «Bank of China Kazakhstan; Natixis, London Branch; Société Générale; Standard Chartered Bank, acting through its Dubai International Financial Centre branch (regulated by the Dubai Financial Services Authority); European Bank for Reconstruction and Development; Deutsche Investitions- und Entwicklungsgesellschaft (DEG); and the OPEC Fund for International Development. Asian Infrastructure investment Bank (AIIB) also provided a $100 million loan to ACWA Power Sirdarya LLC to support the same project. ACWA Power secured a $264,022,901 equity bridge murabaha facility (loan) from First Abu Dhabi Bank to cover its base equity obligations. Then, on September 14, 2022, ACWA Power entered into a Sale Purchase Agreement (SPA) with Silk Road Fund of China – CVXF Inc. for the sale of a 49% equity stake in its wholly owned subsidiary, ACWA Power Uzbekistan Project Holding Company, which holds a 100% equity stake in ACWA Power Sirdarya LLC (the project company responsible for the 1.5GW Sirdarya Independent Power Project). Legal formalities in relation to the sale were expected to reach completion by December 31, 2022. The 1.5GW Sirdarya combined cycle gas-turbine (CCGT) power plant is being constructed in the city of Shirin, Uzbekistan (exact locational coordinates: 40.2377, 69.1115). The power plant is part of the Uzbekistan Government’s plan to improve efficiency and capacity of its electricity production, while boosting economic growth and reducing environmental impact. Set to replace an aging thermal power facility in the area, the project is expected to meet 15% of Uzbekistan’s power demand and account for 8% of its total installed power capacity, upon completion. The Sirdarya power plant is being developed by Saudi Arabia-based power company ACWA Power through a project company named ACWA Power Sirdarya under a build, own, operate and transfer (BOOT) model with a total investment of $1.2 billion. The power generated from the plant will be sold to National Electric Networks of Uzbekistan (NENU) under a 25-year power purchase agreement (PPA). The Sirdarya power plant is located roughly 1.9km northeast of the city of Shirin within Bayaut district and Syrdarya province. It is situated on 84 hectares of land, close to the country’s border with Tajikistan as well as an existing 3GW oil and gas thermal power plant. The CCGT power plant will include two 750MW power generating units. It is expected to have an efficiency rate of more than 60%, save nearly twice the amount of natural gas currently used for electricity generation in the country and help offset approximately 2.2 million tonnes of carbon dioxide emissions a year. The natural gas-fired project will include power blocks and stacks, with each power block comprising two gas turbines, two heat recovery steam generators (HRSG) and one steam turbine (ST). The Sirdarya project will be powered by two of Mitsubishi Power’s M701JAC gas turbines from the company’s air-cooled J-Series. The turbines feature a forced-air-cooled combustor system, an optimized cooling structure and a compressor with a high-pressure ratio. Additionally, the turbines have an extra-thick-film thermal barrier coating that enables more advanced cooling of the turbine blades. The plant will also feature a gas receiving terminal, closed loop cooling water system and open loop cooling system, and an intake and outfall to the Yuzhny-Golodnostepsky (YG) Canal, which will be used to meet the water consumption requirements. Other support facilities will include a water treatment plant, wastewater treatment plants, electrical system, site entrance and security building, laboratory and workshops. The project will involve the design, development, construction, commissioning, testing and transfer of a 500/220kV switchgear station to NENU. The switchgear station will serve as a common facility for both the Sirdarya project and a nearby CCGT project. It will be operated and maintained by NENU. ACWA Power selected China Gezhouba Group Company Limited as the project engineering, procurement and construction (EPC) contractor. Mitsubishi Power, a subsidiary of Mitsubishi Heavy Industries (MHI), was selected to supply the turbines and provide technical advice to support the construction and commissioning. In addition, the contractual scope includes a 25-year long term service agreement (LTSA) to support the operations of the power plant. ACWA Power contracted Juru Energy Consulting and 5 Capitals Environmental and Management Consulting to provide environmental consultancy services for the project. First National Operation and Maintenance (NOMAC), a subsidiary of ACWA Power, will provide operations and maintenance services for the project. NENU and Uztransgaz reached an agreement to provide the gas supply to fuel the power plant. A formal groundbreaking ceremony took place in January 2021. Early site preparation started in April 2021. The first energy efficient gas turbine from from Mitsubishi was installed in December 2022 and the second energy efficient gas turbine from from Mitsubishi was installed in March 2023. The project is scheduled to begin commercial operations in mid-2024.

Additional details

1. ACWA Power Sirdarya LLC — also known as FE "ACWA Power Sirdarya" LLC and Foreign Enterprise “ACWA Power Sirdarya” Limited Liability Company — is a special purpose vehicle incorporated in Uzbekistan for the sole purpose of the Project, and is ultimately 100 per cent owned by International Company for Water and Power Projects ("ACWA Power"). ACWA Power is a developer and operator of a number of power generation and desalinated water plants across Middle East, Africa and Asia. It is registered and headquartered in the Kingdom of Saudi Arabia. 2. The individual contributions of the four Bank of China branches to the loan syndicate are unknown. For the time being, AidData assumes equal contributions ($75 million) across all 10 known members of the $750 million loan syndicate. Thus, the estimated contribution of all four Bank of China branches (combined) is $300 million. However, IJGlobal estimates Bank of China’s contribution at $274 million. This issue warrants further investigation. 3. This project is also known as the Sirdarya Combined Cycle Gas Turbine Power Plant Project, the Syrdarya Power Project, and the Sirdarya 1,500MW CCGT Power Project. 4. The loan agreements include standard representations and covenants by Sirdarya 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 favour of Sirdarya’s financiers, together with events of default relating to Sirdarya equity obligors and major project parties. 5. The CTA, which is governed by English law, covers senior debt facilities and a working capital facility and a facility for funding a debt reserve account for schedule debt service due during the six-month period ending on the first repayment date (30 June 2024) and for each six month period ending on each repayment date falling thereafter up to the final maturity date. 6. The AIIB Project Number is 000470.

Number of official sources

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