23 January 2006 - A consortium made up of International Power, Suez Energy International and Sumitomo Corporation, confirmed today that they have purchased the Al Hidd independent power and water project in Bahrain, and signed a 20-year Power and Water Purchase Agreement (PWPA) with the Ministry of Electricity and Water (MEW) for its output.
The &1.25bn water and power project has been awarded to the consortium by the government of Bahrain on a build, own, operate (BOO) basis, 40 per cent to International Power 30 per cent to Suez Energy International and 30 per cent to Sumitomo.
The PWPA will cover the output from the existing 910 MW combined cycle gas turbine (CCGT) and 30 MIGD water desalination facility, together with the output from a new-build 60 MIGD desalination expansion which is expected to be in operation by the end of 2007. The first 12 MIGD of this will be in operation by April 2007.
The project includes the acquisition of a five-year old combined cycle gas power plant and a water desalination plant. The companies will expand the water desalination operation and the power and water output will be sold to the government under a 20-year contract.
When completed the project is expected to meet 20 per cent of Bahrain's total power needs and 65 per cent of its urban water demand.
A mix of debt and equity in an 85:15 ratio will fund the project cost. The total project cost includes the purchase price for the existing plant and the cost of the 60 MIGD extension. For its 40 per cent share, International Power's equity investment will be $75m. The mandated lead arrangers for the financing of this project are Royal Bank of Scotland, KfW, Sumitomo Mitsui Banking Corporation, Mizuho, Standard Chartered and Gulf International Bank. Financial close is expected in April 2006, and payment of the purchase price in early July 2006.
Philip Cox, Chief Executive of International Power, said, "We are very pleased to have signed this agreement to acquire the existing Al Hidd assets, and to contribute to the expansion of the Bahraini infrastructure through the provision of an additional 60 MIGD of desalinated water. Bahrain is a new market for us, and builds on our existing position in the Middle East where we have significant greenfield development and operational experience. We look forward to working closely with the Government of Bahrain on this project," Cox added.