Saudi Arabian utility developer Acwa Power reached financial close on a $650 million (Dh2.39 billion) desalination project in Jubail.
The Jubail 3A Independent Water Project is one of the largest public-private partnerships for a desalination scheme in the world. It will operate using reverse osmosis technology and is the fourth such scheme to be commissioned in Saudi Arabia in the last three years.
"Signing of the financing agreements for the Jubail-3A IWP project in less than four months from the date of signing the water purchase agreement, especially in the midst of a pandemic which is causing global disruption, is testament to the financial community’s confidence in Acwa Power’s proven capabilities in delivering large scale utility plants,” Acwa Power president and chief executive, Paddy Padmanathan, said.
Reverse osmosis is a process in which water flows through a membrane that separates out heavier sediments and salts. Desired minerals like calcium and magnesium are also added to the filtered water before packaging or transporting it for consumption. Many Gulf nations have switched to using the process over the past decade as it is less energy intensive.
Acwa Power was awarded the project as part of a consortium with Gulf Investment Corporation and Saudi Arabia’s Al Bawani Water and Power Company earlier this year. The consortium won the bid at a record-low tariff of $0.41 per cubic metre of desalinated water. The companies also signed a power purchase agreement with the Saudi Water Partnership Company in May.
The plant is due to begin commercial operations by the end of 2022. Financing was arranged by Al Rajhi Bank, Abu Dhabi Islamic Bank (ADIB), Riyad Bank and Mizuho Bank. Riyad Bank and Bank AlJazira also provided equity bridge loans earlier this month.
In July, Saudi Arabia invited private sector participation in the building and running a series of new wastewater treatment plants across the country.
The kingdom is also planning to sell stakes in public entities in various sectors as part of broader plans to diversify its revenue base and bring more efficiency to state-owned organisations.