Gulf Investment Corporation (GIC) and France's GDF Suez have secured $1.6 billion (Dh5.8bn) in financing for the $2.1bn Al Dur power and water project in Bahrain, GIC and GDF said in a joint statement.
Tight international credit market conditions had forced GIC to renegotiate financing terms of the project.
A syndicate of 20 international and regional commercial and Islamic banks, in addition to the Export-Import Bank of the United States, is participating in the $1.6bn loan. The US Exim is expected to contribute $229 million to the financing once its contribution has been approved by the US Congress.
The Korean Export Insurance Company provided commercial and political risk cover for part of the financing. The project is due for completion in 2011 and would have capacity to generate 1,240 megawatts of power and desalinate 218,000 cubic metres of sea water a day. Al Dur is located in Bahrain's south, about 40km from Al Ezzel, another power generation plant in which GDF Suez has a 45 per cent stake.
Each of the six governments of the Gulf Co-operation Council (GCC) owns an equal stake in GIC.
Guy Richelle, CEO, GDF Suez Energy Middle East-Asia and Africa, said: "The success of this major finance agreement, the first to be finalised in the Gulf this year, is strong evidence of the confidence of the banking community in the strength of the consortium and the economic development of Bahrain. We are proud that together with GIC, we have been able to contribute to the timely completion of the project by providing the interim financing and the necessary guarantees in a time of significant uncertainty, which is a strong testimony to our respective commitment to the Kingdom of Bahrain and to the region."
A group of five institutions have entered as new shareholders in the project.
The Social Insurance Organisation of Bahrain, Instrata Fund, Capital Management House, Bahrain Islamic Bank and First Energy Bank have joined GDF Suez and GIC in the project, where GDF Suez will remain the largest shareholder with a 45 per cent stake.
Hisham Al Razzuqi, CEO of GIC, said: "Achieving financial close on a project of this size, in this market, is indeed a great achievement. When the financial crisis hit the world markets, GIC and GDF Suez stood by their commitments in extremely adverse conditions.
"We committed considerable resources and were determined to see this project completed on schedule. We are grateful to Bahrain for its support and approach." Al Razzuqi said: "The entry of such fine institutions into Al Dur IWPP as shareholders is a further recognition of the merits of the project. We are pleased to have with us again, the Social Insurance Organisation, our partners in Al-Ezzel Power Company. We welcome our new partners: Instrata, Bahrain Islamic Bank and First Energy Bank and recognize the role played by Capital Management House in raising support for the project."
The banking syndicate is led by Calyon, Mashreq and Standard Chartered Bank as Original MLAs.
The syndicate includes Al Rajhi Banking and Investment Corporation, Arab Bank, Arab National Bank, Banque Saudi Fransi, Bayerische Landesbank (London Branch), Credit Industriel et Commercial (London Branch), Dexia Credit Local, Export Development Canada, Fortis Bank, HSBC Bank, KBC Bank (Dublin Branch), KFW Ipex-Bank, National Australia Bank, Société Générale, Bank of Tokyo-Mitsubishi UFJ, The Islamic Bank of Asia and WESTLB.
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