A $1.7 billion financing deal for Bahrain's Al Dur independent water and power project (IWPP) has been signed through arranging banks Calyon, Mashreqbank and Standard Chartered Bank, bankers close to the deal said on Tuesday.

The project has attracted support from a mix of international, regional and Islamic banks and export credit agencies and it is the first major new project financing to close in the Gulf in 2009.

The project is equally owned by a consortium of GDF Suez and Gulf Investment Corporation (GIC) and benefits from a 20-year power and water purchase agreement with the Electricity and Water Authority of Bahrain (EWA). The main contractor is Hyundai Heavy Industries.

The Al Dur plant will be located in the south of Bahrain, about 40 km from Al Ezzel, another power generation plant in which GDF Suez has a 45 per cent stake. The plant is scheduled to enter commercial operation by mid-2011.

The financing includes a $1.2 billion international facility, which is structured as an eight-year, non-recourse club term loan. $420 million is covered by Korean export credit agency Korea Export Insurance Corporation (KEIC), the bankers said.

There is also a $300 million Islamic loan and a $200 million U.S. Import-Export bank facility, ranking pari passu with the international tranche, they added.

The margin ranges from 250-350 bps over LIBOR, one of the sources said. Commitments were received from Al Rajhi, Arab National Bank, Arab Bank, Bank of Tokyo Mitsubishi UFJ, Banque Saudi Fransi, BayernLB, Calyon, CIC Credit Mutuel, Fortis, HSBC, KBC, KfW-Ipex, Mashreq, National Australian Bank, Riyad Bank, Societe Generale, Standard Chartered Bank and WestLB, the bankers said.-Reuters