Narrative
Full Description
Project narrative
On September 3, 2020, financial close was achieved on the Fifth Phase of the Mohammed bin Rashid Al Maktoum Solar Park Project (900MW). Industrial and Commercial Bank of China (ICBC) contributed an estimated $44 million to $570 million to a project finance debt facility to Shuaa Energy 3, a special purpose vehicle (SPV) set up to develop the project. Shuaa Energy 3 is 60% owned by the Dubai Electricity and Water Authority (DEWA), while the Saudi-based ACWA Power and the Gulf Investment Corporation, owned by the governments of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, each hold a 20% stake. The financing was provided through a complex series of conventional, Islamic, project recourse, and bridge lending facilities. Other financial details about the loan are currently unknown. At least ten (10) institutions participated in the lending syndicate, which may have provided a direct loan of around $450 million consisting of conventional and Islamic debt facilities (see staff comments). Known contributors to this loan are Industrial and Commercial Bank of China (ICBC), Standard Chartered Bank, Arab Petroleum Investments Corporation (APICORP), Abu Dhabi Islamic Bank (ADIB), Emirates NBD, Natixis, Warba Bank, Samba Financial Group (Samba), Central Bank of India (CBI), and an unclear 'Kuwaiti Islamic Bank', each contributing an estimated $44 million. Dubai-based Commercial Bank International provided a project recourse mezzanine tranche structured as a 27-year soft mini perm facility.. In addition, bridge lending facilities were provided by Commercial Bank of Dubai (CBD), Mashreqbank, and DEWA. The Mohammed bin Rashid Al Maktoum Solar Park is the largest single-site solar park based on the Independent Power Producer (IPP) model in the world, with a planned production capacity of 5,000 MW by 2030. Phase I was completed on October 22, 2013 and has a capacity of 13 MW. Phase II was completed on March 20, 2017, with a capacity of 200 MW. Phase III was completed on May 1, 2018, with a capacity of 800 MW, and a historically low energy supply price of $2.99 per kW/h. Phase IV was planned to have a capacity of 950 MW. Financing for Phase IV involved multiple Chinese state-owned financial institutions (see Record ID #s #92471, #87119, #92469, #92470, and #89991). On July 28, 2020, Shanghai Electric, a Chinese engineering firm, entered into an Engineering, Procurement, and Construction (EPC) contract with ACWA Power to construct Phase V on a Build, Own, Operate, and Transfer model (BOOT) over three (3) years in three (3) twelve-month phases. ACWA Power has also agreed to sell the generated electricity to DEWA for $0.016953/kWh, a record-low price, for a period of twenty-five (25) years. Phase V is expected to have a capacity of 900 MW, enough to power 270,000 homes. This loan brought the total investment into the Mohammed bin Rashid Solar Park to $13.6 billion. The five phase was inaugurated on or around June 18, 2023.
Staff comments
1. Sources indicate that that the full volume of financing for Phase V reached a maximum of $570 million. However, the lending syndicate only has a known membership of ten (10) participants, each of which contributed an estimated $44 million. Given the discrepancy between the implied total financing of this syndicate ($440 million) and the full reported amount, for the time being, AidData is assuming that the final $130 million was contained in the further project recourse financing and bridge lending facilities contributed by Commercial Bank of Dubai, Mashreqbank, and DEWA. 2. Industrial and Commercial Bank of China's (ICBC) contribution to the lending syndicate was estimated by TagMyDeals, the source used for some of the financial reporting in this project. 3. One of the lenders is named as 'Kuwaiti Islamic Bank'. However, as no such bank exists, it is unclear which specific institution this name refers to.