Dumat al Jandal wind farm deal to close today
Sponsors of the 400MW Dumat al Jandal wind farm in Saudi Arabia – EDF Renouvelables (51%) and Masdar (49%) – signed a $270 million 20-year soft mini-perm financing to fund the scheme on 30 June 2019. Full financial close is expected today (8 July).
The $375 million project, located in the northern Al-Jouf region and scheduled for commercial operations in Q2 2022, will be the Kingdom’s first utility-scale wind farm and is backed by a 20-year PPA at SR79.97 per MWh ($21.3253 per MWh) with the Saudi Power Procurement Company (SPPC).
The project contract is for a 20-year term, with the possibility of renewal, and the scheme also carries a 30% local requirement on the construction side. Vestas is the turbine supplier.
Mandated lead arrangers on the deal are Korea Development Bank, Natixis, National Commercial Bank, Norinchukin, SMBC and Societe Generale. Pricing is in the low 100bp over Libor region, rising in step-ups to high 200bp. The step-ups will kick in after the approximately 2.5-year construction period and three years of operations. King & Spalding provided legal counsel to the sponsors, while Cranmore Partners acted on the financial side. SPPC is being advised by HSBC (financial) and Baker McKenzie (legal).
A source close to the deal says interest rate swaps will place today (starting 8 July), which marks the final condition precedent to be fulfilled ahead of financial close. Commercial Bank of Dubai will provide the interest rate swaps. The debt is dollar-denominated and the tariff paid in local currency – if the Saudi riyal is unpegged or devalued during the 20-year term of the offtake agreement, then there is an indexation mechanism to adjust the tariff of the PPA.
EDF and Masdar's team submitted the lowest bid for the wind farm on 17 April 2018, beating rival consortia led by Engie and ACWA Power. Dumat al Jandal is the second project in the first round of Saudi Arabia’s National Renewable Energy Programme (NREP) headed by the Ministry of Energy’s Renewable Energy Project Development Office. The awarding authority pre-qualified 60 firms for the second round of NREP on 26 June 2019, which comprises up to 1,515MW of solar projects.
