CMEC secures loan — via EPCF arrangement — for Basra 650MW Combined-Cycle Power Plant Expansion Project

On October 12, 2016, China Machinery Engineering Corporation (CMEC) and KAR Electrical Power Production Trading FZE (KEPPT) signed a $1.001 billion EPC Plus Financing (EPC+F) contract for the Basra 650MW Combined-Cycle Power Plant Expansion Project. Sinosure attended the EPC+F contract signing ceremony and apparently issued a credit insurance policy to the borrower. The purpose of the project is to add 650 megawatts (MW) to the Shatt Al Basra Gas Power Plant, which is located about 10 kilometers south of Basra International Airport. At baseline, the plant had a power generation capacity of 1250 MW. with non-Siemens turbines operating in simple-cycle mode. The expansion project involves the construction of a gas storage facility, combustion chambers, a powerhouse, substations, a cooling tower and other related facilities, the installation of gas turbines and generators, and the laying of transmission lines. Upon completion, the power plant is expected to be converted to operating in combined cycle mode and its overall efficiency is expected increase by more than 50 percent. The expanded plant is designed to include five Siemens SST-900 turbines with a power generation capacity of 130 megawatts each. Upon completion, the power plant is expected supply around one million Iraqis with reliable and clean electricity. CMEC is the EPC contractor responsible for implementation. However, Siemens is also involved as a subcontractor. It agreed to supply five of its highly-efficient steam turbines, ensuring the additional power supply comes at no extra fuel requirement. The implementation of the project commenced in February 2019 and it was originally expected to reach completion within 30 months (August 2021). However, the project is running behind schedule. In January 2022, Unit 1 of the power plant was connected to the national power grid. Then, in February 2022, Unit 1 successfully passed a reliable operations and performance test. Four months later, in June 2022, CMEC obtained a takeover certificate from the project owner (KEPPT) for Unit 2. Then, in August 2022, Unit 3 successfully passed a reliable operations and performance test and CMEC obtained a takeover certificate from the project owner (KEPPT) for Unit 3.

Additional details

1. This project is also known as the Shat al-Basra Power Plant Upgrade 650 MW Project. The Chinese project title is 伊拉克巴士拉650MW燃机联合循环电站扩建项目. The Arabic project title is لاضافة الوحدات الحرارية الجديدة لمحطة شط البصرة الغازية Combined cycle units. 2. Under most EPCF (EPC+F) contractual arrangements, a loan is extended to the EPC contractor but with a sovereign guarantee from the host government. Therefore, AidData assumes that the loan issued to CMEC is backed by a repayment guarantee from the Government of Iraq (i.e. a sovereign guarantee). 3. The face value of the loan that was issued to CMEC is unknown. For the time being, AidData assumes that the face value of the loan is equivalent to 85% of the value of the $1.001 billion EPC+F contract.

Number of official sources

12

Number of total sources

19