Ashurst Advises on the Financing of the US$ 1.4 Billion Shuweihat S3 IPP Project

Ashurst advised the funders on the successful financing of the Shuweihat S3 independent power project in the Emirate of Abu Dhabi, United Arab Emirates, which reached financial close on 18 May 2011.

Ashurst acted as both international and UAE legal counsel and advised the ECA lenders, Japan Bank for International Cooperation (‘JBIC’) and The Export-Import Bank of Korea (‘K-EXIM’), together with the Mandated Lead Arrangers, BNP Paribas, Mizuho, Bank of Tokyo Mitsubishi-UFJ., HSBC, National Bank of Abu Dhabi, Samba Financial Group and SMBC. The facilities comprise US$ 1.1 billion of long-term facilities provided by JBIC, K-EXIM and the Mandated Lead Arrangers and US$ 280 million of equity bridge facilities.

The Shuweihat S3 project comprises a new-build power generation plant that will produce 1600 MW of power on completion in 2014. The plant will use four SGT5-400F Siemens gas turbines in combined cycle mode. The plant’s entire power output will be sold to Abu Dhabi Water and Electricity Company under a 25-year power purchase agreement.

The plant will be owned by the Shuweihat Asia Power Company, which is 60 per cent owned by Abu Dhabi Water and Electricity Authority, with Sumitomo Corporation and Korea Electric Power Corporation (‘KEPCO’) owning the remaining 40 per cent. The plant will be operated by Shuweihat Asia O&M Company, a joint venture between Sumitomo and KEPCO.

Ashurst’s cross-border team was led by energy partners David Wadham (Abu Dhabi) and John Inglis (London) with support from partner Chris Whiteley on the hedging aspects, assisted by counsel Mhairi Garcia and associates, Nikhil Markanday, David McCormick, Pierre Roux, William Rhee, Kristen Angus, Saif Alrousan and Faris Hadi.

David Wadham said:

“The Shuweihat S3 IPP is ADWEA’s first power only IPP and has been undertaken in a still fragile financial market and at a time of significant change in Abu Dhabi’s power generation sector. The transaction is important not only because it demonstrates Abu Dhabi’s and ADWEA’s continuing attractiveness to financial institutions but also because it emphasizes JBIC’s continuing commitment to the UAE and represents K-EXIM’s and KEPCO’s first power project in Abu Dhabi, which is important given KEPCO’s involvement with Abu Dhabi’s nuclear programme. The plant will serve to meet Abu Dhabi’s increasing power demand and will therefore play an important role in sustaining Abu Dhabi’s continuing industrial and economic growth.”