CCB contributes to $872.13 million syndicated deferred payment (seller’s credit) agreement for 730MW Al-Rumaila Combined Cycle Gas Power Plant Project (Linked to Record ID#65743, #92405, #92407)

In 2018, CCB, China Eximbank, BOC, Power China, contribute to $872.13 million syndicated deferred payment (seller’s credit) agreement for 730MW Al-Rumaila Combined Cycle Gas Power Plant Project, Iraq On April 18, 2018, a syndicate of Chinese banks signed a $872,130,000 syndicated seller’s credit (deferred payment) agreement with Sinohydro Corporation Ltd. (Sinohydro) and KAR Electrical Power Production Trading FZE (KEPPT) — a special purpose vehicle registered in Dubai and wholly owned by KAR Group — for the 730MW Al-Rumaila Combined Cycle Gas Power Plant Project.

The members of the loan syndicate include China Eximbank (as the leading bank), Power China Finance Company Ltd. (as the co-leading bank), Bank of China, China Construction Bank, and the Beijing Branch of China Minsheng Bank Corp Ltd.

The $1,026,000,000 project is being implemented on an Independent Power Project (IPP) basis and financed according to a debt-to-equity ratio of 85:15 (with Iraqi KAR Power Company providing the equity contribution). The interest rate of the loan is unknown. However, it is known that the loan carried a 14.5-year (174-month) maturity length.

The Iraqi Government issued a sovereign guarantee for deferred payment to Sinohydro Corporation Ltd. (Sinohydro) under its EPC contract with KAR Electrical Power Production Trading FZE, while Sinosure provided medium and long term export seller’s credit insurance to Sinohydro and Sinohydro provided a credit guarantee for 10% of the financing.

China Eximbank also provided financing for 100% of the amount of account receivables of Sinohydro under its EPC contract without recourse.

The project’s recourse structure is designed so that during the construction period Sinohydro is liable to pay the syndicate of Chinese banks in the event of default and Sinosure refuses to provide indemnity.

Later, during the power plant’s operation period, KAR Electrical Power Production Trading FZE will be responsible for repayment of the syndicated loan, and if it fails to do so, the Chinese banks will be repaid by the Iraqi Government (due to the sovereign guarantee) or via indemnity from Sinosure.

The purpose of the project is to convert the Al-Rumaila Power Plant, in Basra Governorate, Iraq, from a simple cycle plant to a combined cycle plant by installing up to 730MW of steam turbines and all other necessary equipment. The wider purpose of the project is to alleviate power shortages in Iraq following conflict there.

The first phase of the project is to expand the power plant's existing 5 × 293MW simple cycle gas-fired unit into a combined cycle unit.

The combined cycle unit consists of 2 gas turbines + 2 waste heat boilers + 1 turbo-generator set, and 3 gas turbines + 3 waste heat boilers + 1 turbo-generator set.

Sinohydro Corporation Ltd. (Sinohydro), a subsidiary of Power Construction Corporation of China (POWERCHINA), is the general EPC contractor responsible for implementation. It signed a deferred payment EPC contract with KAR Electrical Power Production Trading FZE. RAZ Company for Construction & Engineering is also involved as a sub-contractor.

A notice to proceed (NTP) was issued to the general EPC contractor on April 18, 2017. The first loan disbursement took place on April 18, 2018. Construction began on June 7, 2018. The first unit of the power plant was successfully connected to the grid on June 1, 2021.