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Apicorp buys key stake in Saudi utility project

MANAMA, March 27, 2017

Acwa Power, a Saudi-based developer, owner and operator of independent power generation and water desalination plants, and Arab Petroleum Investments Corporation (Apicorp) have signed a sale and purchase agreement for an eight per cent effective stake in Shuqaiq Independent Water and Power Project (Shuqaiq IWPP) in Saudi Arabia.

Shuqaiq IWPP is one of Acwa Power’s early greenfield developments in Saudi Arabia.

Located on the western shores of Saudi Arabia, 130 km north of Jazan, the plant has a capacity to generate 850 MW of power and 212,000 cu m of desalinated water per day.

The project achieved financial close in 2007 and started commercial operations in 2011. It has a 20-year power and water purchase agreement with Water and Electricity Company, Saudi Arabia.

As per the deal, Apicorp will buy a 13.33 per cent equity stake in Shuqaiq International Water Company (SIWEC), thereby giving it an eight per cent effective stake in Shuqaiq IWPP, said the statement from Acwa.

Headquartered in Dammam, Saudi Arabia, Apicorp was set up in 1975 to foster the development of the Arab world’s oil and gas industries. It is owned by the 10 member states of the Organization of Arab Petroleum Exporting Countries (Oapec). It also operates a banking unit in Bahrain.

Prior to this transaction, Acwa Power had a 40 per cent effective share in the project, after having acquired a six per cent effective stake in 2014 from Mitsubishi Corporation, Japan, to add to its original 34 per cent stake in the project.

This transaction complements the memorandum of understanding (MoU) for a co-investment initiative signed by Apicorp and Acwa Power in 2014, suggesting close collaboration in various projects in the fields of power generation and water desalination across the core geographies of Saudi-based power plant developer.

Commenting on the deal, Dr Raed Al Rayes, the deputy chief executive and general manager of Apicorp, said: "Shuqaiq IWPP ranks among the major developments in Saudi Arabia’s water and power sector and makes significant contributions to meeting the country’s rising demands in this field."

"We are proud to support Acwa Power in their growth plans through this transaction, which enhances and diversifies at the same time our equity portfolio by increasing exposure to the power generation sector that has stable profit rates and low risk," stated Dr Al Rayes.
"We look forward to working with our partners at Shuqaiq IWPP and to developing similar partnerships with companies in the same sector," he added.

Rajit Nanda, the chief investment officer of Acwa Power, said: "This transaction is a reflection of the confidence that our partners have in Acwa Power, and in the way we develop, build and operate our assets."

Apicorp, he stated, has been a valued partner for many years, and this transaction capitalises on the alignment of the business objectives of the duo.

Kashif Rana, the chief financial officer of Acwa Power, said this transaction is a result of its evolving portfolio and corporate finance strategy.

"We are focusing on ensuring that our portfolio carries an optimum risk-return profile, while having a balance sheet that being efficient capital-structure wise will also support our growth plans," he added.

With an investment value in excess of $30 billion, Acwa Power has a major presence in 11 countries including in the Middle East and North Africa, Southern Africa and South East Asia regions.-TradeArabia News Service

Tags: Saudi Arabia | Apicorp | Acwa | utility project |

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