March 14, 2011 / 12:07 PM / in 7 years

PFI - Saudis delay project bid due to quake

LONDON (Project Finance International) - Saudi Electricity Company has delayed bidding for the Qurayya independent power project (IPP) by a week to March 26th due to the “exceptional circumstances” of the Japanese earthquake. The delay highlights the importance of Japan as the lead investor in the Gulf.

Last week five teams bid for the 1500MW Sur IPP in Oman with two teams, led by Marubeni and Mitsui (8031.T), bidding competitively backed by debt funding from Japanese state agencies JBIC (Japan Bank of International Cooperation) and Nexi (Nippon Export and Investment Insurance). Next month Sumitomo (8053.T) and South Korea’s Kepco (015760.KS) are due to reach financial close on a US$1.6bn, 1600MW IPP in Abu Dhabi, Shuweihat 3, backed by a large JBIC loan.

Six international teams are expected to bid for the 1800MW-2200MW Qurayya scheme including those involving Marubeni and Sumitomo. They will be backed by JBIC loan financing under its overseas investment loan (OIL) programme. JBIC funding has been a key to the success of many large energy financings in the Gulf. Its role has grown in importance as commercial banks have cut back long term lending due to the credit crunch. On the Shuweihat 3 scheme, seven commercial banks will provide US$361m of debt. JBIC will provide a US$370m OIL with South Korea’s Kexim, US$370m.

Abu Dhabi will be watching events very closely in Japan for another reason - it is well advanced in its plans to build 5600MW of new nuclear plant using South Korean technology.

Japan’s interest in the Gulf - the need for energy - will presumably increase due to the earthquake. But its financial resources will be stretched.

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