Saudi Arabia's Acwa Power closes $1.3bn debt facility for Red Sea Project

A consortium led by Saudi Arabia’s Acwa Power closed a senior debt facility of more than $1.3 billion that is being used to finance a multi-utilities project on the Red Sea powered by renewable energy. Acwa Power has been appointed by the Red Sea Development Company to design, build, operate and transfer the Red Sea Project’s utilities infrastructure, it said in a statement on Wednesday.

It will rely entirely on renewable energy for power generation, water production, wastewater treatment and district cooling. “The Red Sea Development Project … spanning an area the size of Belgium, is a remarkable project,” said Paddy Padmanathan, chief executive and vice chairman of Acwa Power.

“We are proud to be the provider of all utility services to the very exacting zero carbon emission, zero waste and zero plastic standards and are delighted to have achieved this milestone on yet another path breaking project that is helping to meet the clean energy ambitions of Vision 2030,” he said.

The project includes the provision of renewable power, potable water, wastewater treatment, district cooling and solid waste treatment for 16 hotels, an international airport and related infrastructure. Phase one is expected to be complete by the end of this year. Other members of the consortium include China’s Spic (State Power Investment Corporation) Huanghe Hydropower Development Company and Saudi Tabreed Cooling Company.

The Red Sea Development Company, which is wholly owned by the kingdom’s Public Investment Fund, was established to develop the Red Sea Project, a luxury, regenerative tourism destination that aims to set new standards in sustainable development and position the kingdom on the global tourism map. The Red Sea Project is not investing any of its own capital and is committing to purchase its utilities from the consortium for the next 25 years.

The kingdom’s sovereign wealth fund PIF will provide the guarantee for the 25-year offtake agreement. The senior debt project is financed through a combination of US dollar denominated and Saudi Riyal denominated financing provided by a consortium of Saudi Arabian and international banks, including the Al Rajhi Bank, Apicorp, Bank Saudi Fransi, Riyad Bank, Saudi British Bank, Saudi National Bank and the Standard Chartered bank.

The contract was procured as an independent public-private partnership, intended to cover the design, construction and operation of the systems providing utilities, accompanied by the associated networks and infrastructure.

“The commitments from such a diverse group of lenders is a testament to the strength of the vision and structure of this transaction and … underpins the faith and belief that financial markets have in Acwa Power’s track record,” Mr Padmanathan said.

Acwa Power, which completed its $1.2bn initial public offering last year, aims to double its renewable energy portfolio in the next five years amid plans to tap the clean energy boom in the region and beyond.