Skip to content

Water Deal of the Year: Shortlist

For the project finance deal, signed in 2019, which made the biggest contribution to the advancement of private sector participation in the international water sector.

Shortlisted Nominees

 

Kanpur STP financing, India

What is it?

The financing package supporting the INR8.2 billion ($114 million) project that will see the construction of three sewage treatment plants (STPs) in Kanpur city, Uttar Pradesh with a combined capacity of 50,000m3/d, alongside rehabilitation of an existing STP and extensive network improvements.

Who is involved?

The project is being developed under a 15-year hybrid annuity model (HAM) contract by a consortium of Shapoorji Pallonji and SSG Infratech on behalf of the client, local utility UP Jal Nigam, which was supported by the National Mission for Clean Ganga (NMCG) programme. Debt finance for the privately-financed portion of the deal was provided by IndusInd Bank.

What makes it special?

The project was the largest to reach financial close in 2019 under the NMCG programme and provides a vision of the scale and importance of works that can be completed under the crucial national effort, at a time when the returning government promised to extend the model created by the NMCG to every part of the country.

The deal acted as pathfinder by combining the complex structure of the HAM contract model with the ‘one-city, one-operator’ model where related infrastructure is clustered under a single operator.

 

The streamlining of operations demonstrates that PPP can pay off away from process plant contracts in India, and offer a holistic solution in the worst-polluting city on the holy Ganga river.

The scale of the project, and the willingness to innovate at Kanpur have given a big impetus post-to a lacklustre project finance market in India and have encouraged larger players to participate in bids for projects. The future looks bright for private finance in India.

 

Shuqaiq 3 IWP financing, Saudi Arabia

What is it?

A $600 million funding deal assembled to fund the construction of a 450,000m3/d privately owned desalination plant on Saudi Arabia’s Red Sea coast.

Who is involved?

The project was rolled out by the country’s central PPP body the Saudi Water Partnership Company (SWPC). The 25-year build-own-operate contract was secured by a project development team comprising Marubeni (45%), Almar Water Solutions (30%), Rawafid Holding (15%) and Acciona (10%). $450 million of senior debt was provided by a team of banks including local players NBC and Samba, and international lenders Crédit Agricole, MUFG, Norinchukin and SMBC.

What makes it special?

Despite the scale of the plant and the relative newness of the revitalised Saudi water PPP project rollout, the developers secured final signoff on the financing package less than three months after the signing of the water purchase agreement – a stunning testament to the security of the Saudi project finance market, and the sustainability of a market where dozens of major projects are lined up for the years to come.

The billions of debt that will be required to sustain Saudi Arabia’s PPP rollout will require a colossal amount of liquidity from the international banking sector: the close involvement of both Saudi lenders and the best of the international debt providers shows that there is no limit to the appetite for Saudi water investment from the very highest echelons of the regional and international banking sector.

 

Despite security threats in the region to water infrastructure, procurement of the project and the financial package proceeded at a rapid and smooth pace. The combination of hungry debt investors, skilled project developers and a buccaneering and reactive offtaker meant the project came in priced at a highly-competitive tariff of $0.52/m3, pushing the envelope of desalination pricing to the limit.

 

Taweelah IWP financing, Abu Dhabi

What is it?

An AED3.19 billion ($870 million) financing package supporting the construction of the world’s largest membrane desalination plant, a 909,200m3/d facility in Abu Dhabi, UAE.

Who is involved?

Project developer ACWA Power will hold a 40% stake in the plant, with the remainder split between state bodies ADPower (20%) and Mubadala (40%). ADPower subsidiary the Emirates Water and Electricity Company is the offtaker. The AED2.71 billion ($740 million) debt package was supplied n a group of banks including Bank Boubyan, Emirates NBD, Mizuho Bank, Natixis, the Norinchukin Bank and Siemens Bank.

What makes it special?

The project incorporates 50MW of on-site solar power generation, a radical breakthrough on design that allowed the developer to slash the plant’s expected energy bills and offer an ultra-competitive bid, demonstrating the burgeoning link between water infrastructure and renewable energy.

The micro-managed design, close collaboration with lenders and envelope-pushing at every stage of the procurement process allowed the project developers to submit an offer that turned out to be impossible to refuse: at $0.49/m3, the tariff for water from the plant was the lowest ever seen in the desalination market, and established a benchmark that will influence project planners for years to come.

 

The project came amid a period of radical reorganisation at Abu Dhabi’s water utility sector structure. Despite the changing of clients and offtakers over the course of the project, the procurement process ran smoothly over a two-year period to deliver a facility that will redefine how the scale and cost of seawater desalination can be managed.

 

Western Semarang water supply financing, Indonesia

What is it?

An IDR417 billion ($31 million) investment funding the construction of a major water supply project in Indonesia’s Central Java province. The project includes an 86,400m3/d water treatment plant, 9km supply pipeline and three new reservoirs, serving the city of Semarang.

Who is involved?

The project will be developed by Moya subsidiary Aetra Air Jakarta (75%) and partner Medco Gas (25%) under a 25-year build-operate-transfer contract, on behalf of the client, the municipal water company of Semarang City. The finance package includes an IDR265 billion ($18.4 million) loan facility from Bank Central Asia. The project is secured by a government guarantee provided by the Indonesia Infrastructure Guarantee Fund.

What makes it special?

Close work between government guarantors, international backers and the developers meant that project award and financial close was secured smoothly in one of the world’s most difficult markets for private finance. With a legacy of failed projects to contend with, success at Western Semarang required a boldness in bidding and extremely careful support from the client, meaning success is a truly admirable achievement.

PPP in Indonesia has been a notoriously slow process in the past even where it has succeeded. By racing from project award to financial close within six months, the project developers and their clients showed that private finance today can not only make a major difference for the country’s desperately needed water infrastructure, it can do it at a pace that matches even the most well-established project finance markets in the world.

 

By planting a flag for PPP, the project opens up a huge range of opportunities for Indonesia to tap new sources of finance for desperately needed water supply infrastructure. By reducing subsidence from groundwater over-abstraction and moving the city significantly towards its 100% clean water supply target, the Western Semarang deal offers a picture of a future that looks very bright for Indonesia.

 

The Global Water Awards 2020 is proudly sponsored by:

Dupont Water Solutions

%d bloggers like this: