MUFG is pleased to confirm the financial close of a limited-recourse financing for the Jubail 3B Independent Water Plant (IWP) in Saudi Arabia, supporting a consortium comprising of Engie, NESMA Holdings and AJLAN.
After a successful bid process between four consortiums under the Saudi Water Partnership Company (SWPC) well established I(W)(P)P model, the Engie led consortium was appointed preferred bidder at the end of April 2021 and subsequently signed the Project Agreements in June 2021 for the Jubail 3B Project.
MUFG acted as Mandated Lead Arranger, Hedge Provider, Market Hedge Coordinator, Global Facility Agent, Commercial Facility Agent, Offshore Account Bank and Green Loan Coordinator on the deal, which closed in October 2021.
Jubail 3B comprises of a reverse osmosis Independent Water Plant with capacity of 570,000m3/d, located in the in the Eastern Province of Saudi Arabia. This strategic project will also include solar energy units to reduce the electricity consumption from the grid, in addition to water tanks with a storage capacity of one operational day.
The project will be commissioned in 2024, contributing to job creation in the region during the construction and operation phases. Once complete, the project will provide safe drinking water for residents of the cities of Jubail and Dammam in Saudi Arabia, a nation which is among one of the hottest and driest in the world.
The desalination facility is underpinned by a long-term 25-year Water Purchase Agreement, with a rigorous procurement process led by SWPC resulting in one of the most cost-competitive tariffs for potable water, set at USD 42.440 cents/ m3.
The Jubail 3B financing also benefits from Green Loan certification based on the established Green Loan Principles (GLP). The GLPs are a high-level framework of market standards and guidelines to facilitate and support environmentally sustainable economic activity, providing a consistent methodology for use across the green loan market. In its role as Green Loan Coordinator, MUFG coordinated the review activity which was undertaken by an independent Second Party Opinion provider.
Jean-Marie Tassel (Vice President) and Mohit Verma (Associate) within MUFG Power and Renewables' team in EMEA led MUFG's involvement in Jubail 3B. Jean-Marie said:
"We are delighted to have played a lead role on this financing and support the Engie led consortium on the second successful greenfield IWP financing in Saudi Arabia in 2021, following Yanbu 4.
"MUFG also coordinated the Green Loan process for this landmark project, which is not only testament to our sustainable financing credentials, but will also support the Kingdom of Saudi Arabia with meeting the potable water demand of the region.
"Going forward, we will look to continue to build on the successes of Yanbu 4 and Jubail 3B, and further enhance MUFG's footprint in the water sector in the Middle East."
Sarah Kiriluk (Head) and Mounir Madani (Financial Advisor) within the Acquisitions, Investment and Financial Advisory team for Middle East and Africa within ENGIE led the Financing process on behalf of the Project Company. Sarah said:
"Following our successful collaboration on the closing of Yanbu IWP financing earlier this year, we are happy to count again on MUFG continuous support to close another landmark financing and to secure again Sustainable Green Loan certification, with ENGIE as sponsor.
"This project marks another key step towards more sustainable and environmentally friendly infrastructures development in the region."
MUFG is a leading provider of project finance for power and water projects globally, having been an active lender to utility and energy projects for nearly two decades across the Americas, Europe, the Middle East, Asia and Australia. Within sustainable energy, MUFG has financed over 578 transactions representing more than 127 GW of renewables generation capacity to date.