Rabigh 1’s new financing makes big savings for power company

Saudi Electricity Company and Riyadh-based Acwa Power announced that they had refinanced debt, totalling more than US$1.82 billion, of the Rabigh 1 IPP.

New financing terms for Saudi Arabia’s first independent power project (IPP) will result in savings of about 1 billion Saudi riyals (Dh979 million) over the life of the power plant.

Saudi Electricity Company (SEC) and Riyadh-based Acwa Power on Wednesday announced that they had refinanced debt, totalling more than US$1.82bn, of the Rabigh 1 IPP.

“The refinancing of Rabigh 1 IPP has been achieved under difficult financing conditions and is structurally a win-win for all parties concerned,” said Fahad Al Sudairi, the chief financial officer of SEC. He said this would save the utility about 1bn riyals over the next 17 years, when the power purchase agreement expires.

Conventional debt totalling US$300m was covered by Korean insurance companies as well as international banks.

This arrangement with the insurance companies leading a long-term fixed-rate agreement points to a new pocket of liquidity for future investment in the region.

Rabigh Electricity Company (Rabec), the project company owned by Acwa, Korea Electric Power Corporation (Kepco) and SEC, had the 1.2 gigawatt heavy fuel fired power project come online three years ago. The $2.5bn power plant, on the west coast of the country, was the first to be financed without a sovereign guarantee.

“It is heartening to see the Rabigh 1 IPP project, which was the first IPP project in Saudi Arabia under the new framework, to go from original financial close, construction, three years of smooth operation and now successful refinancing,” said Thamer Al Sharhan, the chairman of Rabec.

“This demonstrates the success of the IPP model in the kingdom and shows how proactive financial management can improve the economics for all parties concerned.”

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