Marubeni Wins Power and Water Project in Abu Dhabi World-Leading Scale with Total Investment of USD 3 Billion

Jan. 5. 2005
Marubeni Corporation

Marubeni Corporation, in cooperation with JGC Corporation, BTU Power Company of the United States and Powertek Berhad of Malaysia, has successfully won the right to own, operate and expand the 20-year Taweelah B power and water project in the Emirate of Abu Dhabi in the United Arab Emirates ("UAE"). At the end of last year a basic agreement was reached with the Abu Dhabi Water and Electricity Authority ("ADWEA") and approved by the Executive Council of the government of the Emirate. The power and water purchase agreement ("PWPA") is expected to be officially signed in the middle of January 2005. With a total project cost of USD three billon, inclusive of the costs of purchasing the existing plant and constructing new units, it is one of the world's largest independent water and power projects ("IWPP") both in terms of production capacity and finance. After the signing of the PWPA, a new project company will be set up with the Marubeni-led consortium having a 40% stake and ADWEA retaining a 60% stake. The new project company will swiftly conclude negotiations for loan agreements to commence in April 2005. Completion of the newly-constructed units is anticipated in July 2008.
Some USD 2 billion of the total financing requirement will come from a limited recourse project finance loan provided by Japan Bank for International Cooperation ("JBIC") and an international syndicate of 15 commercial banks from eight countries. JBIC alone will be providing USD 1.2 billion in funding making this one of the largest project finance transactions that JBIC has ever undertaken.
The project involves the acquisition of a combined power and water generation plant with a current capacity of approximately 1,000 MW of electricity and 95 MIGD of water. The plant is situated in the district of Taweelah, approximately 80 kilometers northeast of Abu Dhabi. In addition to the acquisition of the existing plant, the project includes the construction of new units to increase production capacity by an additional 1,000 MW and 65 MIGD. The new construction will utilize thermal power equipment manufactured by Siemens AG of Germany and water production equipment manufactured by Fisia Italimpianti SpA of Italy. From 2008 the project will therefore have a total production capacity of 2,000 MW of electricity and 160 MIGD. All production capacity will be sold under the 20-year PWPA to the Abu Dhabi Water and Electricity Company ("ADWEC"). The new construction will utilize the latest combined thermal power technology to maximize efficiency and meet the severest emission regulations.
In participating in the tender, the Marubeni-JGC consortium bid a total of USD 1.69 billion for the purchase of the existing plant to become the first-ranked bidder. After a technical and commercial evaluation that followed the bidding, the consortium won the project against competition from several major European competitors. The high overall evaluation reflected not only the top price tendered for the acquisition but also Marubeni's global IPP experience and reputation, the procurement of new funds from JBIC, JGC's track record in plant construction management and the impressive experience of Siemens and other companies involved in the construction of the new facilities. For this project Marubeni teamed up with JGC Corporation, with which it has close ties in plant construction. The project is the first large-scale independent power and water production project in which JGC is investing direct equity.
The United Arab Emirates is one of the most resource-rich countries in the world. It boasts the world's third-largest deposits of crude oil and the world's fifth-largest deposits of natural gas, much of which is exported to Japan. It maintains a high investment rating of A2 assigned by Moody's. Since the 1990s, the UAE has been actively promoting private capital projects. Its foreign-backed power and water projects are regarded as ground-breaking transactions in the Middle East. A large number of similar projects are expected to be launched in the region and Marubeni will continue to vigorously endeavor to win such projects.

By adding prime power generation assets in the Middle East, Marubeni will further enhance its power production portfolio, currently centered in Asia.

Profile of Powertek Berhad

Based in Malaysia
Established in December 1990
Engaged in the power generation business (currently Malaysia's second largest independent power generation operator)

Profile of BTU Power Company

Based in Boston
Established in 1999
Engaged in investment in power projects in the Middle East and North Africa

Taweelah B power and water project

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