Sumitomo signs loan agreement for funding Ghubrah water project



Muscat: Japan's Sumitomo Corporation, in conjunction with Malakoff Corporation Berhad and Cadagua, has entered into a project finance loan agreement with the Sumitomo Mitsui Banking Corporation (SMBC), the Bank of Tokyo-Mitsubishi UFJ (MUFG), and the Japan Bank for International Cooperation (JBIC) for funding the Al Ghubrah IWP, a private sector desalination plant in Muscat.

This project was awarded by the state-owned Oman Power and Water Procurement Company in November 2012. The project company, Muscat City Desalination Company (MCDC), is jointly owned by a consortium led by Malakoff International Limited, Sumitomo Corporation of Japan and Cadagua of Spain. Malakoff owns 45 per cent of project developer MCDC with the balance interest held by Sumitomo Corp and Cadagua at 45 per cent and 10 per cent, respectively.

The plant, expected to be completed by October 2014, will provide over 190,000 cubic metres of fresh water per day over the course of 20 years, which is enough to supply over 800,000 people in the area. The 20-year water purchase agreement has already been signed with the government for the sale of potable water from the desalination plant. The plant will be constructed on site of the current water and power plant in Al Ghubrah.

Malakoff CEO Zainal Abidin Jalil reportedly said that this was another significant milestone in expanding its presence to position the company as a leading independent water and power producer in the international market.

"This successful foray into the Oman water desalination business has certainly put Malakoff in a stronger position to pursue more opportunities in the MENA region," he was quoted as saying by a Malaysian newspaper.

The loan agreement, comprised of an all-Japanese team of financial institutions, will be co-financed by SMBC, MUFG, which is also the appointed financial advisor, and JBIC. Sumitomo considers this to be a valuable project to strengthen the ties between Japan, which aims to improve relations with energy resource-rich Middle Eastern countries, and Oman, which in light of rapid economic growth is pressed for additional social infrastructure including water production, and will aim for the prompt completion and commencement of the project.

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