Japanese banks back Marubeni on Qatar's first solar power plant
Siraj-1 800MW project west of Doha has estimated total cost of US$467 million
29 Jul 2020 | Michael Marray

A consortium featuring Marubeni Corporation has reached financial close on the Siraj-1 Solar Power Plant in Qatar. The 800MW project is sited around 80 kilometres west of the capital Doha, and has an estimated total cost of US$467 million.

Marubeni has a 20.4% stake in the project, with Total Solar International of France owning 19.6%. Qatari company Siraj Energy has 60%. Together they will develop, construct, operate and maintain the facility, which has a commercial operation date scheduled for April 2022.

The project has been awarded under a Build, Own, Operate, and Transfer structure. Cashflows are underpinned by a 25-year Power Purchase Agreement (PPA) with Qatar General Electricity and Water Corporation (KAHRAMAA). After this 25-year period ownership of the plant will be transferred to KAHRAMAA.

The project company Siraj-1 has already lined up senior debt, provided by Japan Bank for International Cooperation (JBIC) and Mizuho Corporate Bank. JBIC will provide project financing amounting to US$165 million (JBIC portion) under its Growth Investment Facility. The loan is co-financed with Mizuho Bank, with total co-financing amount around US$330 million.

The plant capacity equals about 10% of Qatar's current peak electricity demand, with 350MW of that capacity linked to the grid as a first phase in Q2 2021. The commercial commissioning for the total capacity will be in Q1 2022 in order to achieve the announced strategic objective of the National Strategic Development 2018-2022.   

The plant will contribute to reducing around 26 million tons of emissions during the project period, and will support Qatar's commitment to host a carbon neutral FIFA World Cup. It also falls in line with one of the objectives of the National Program for Conservation and Energy Efficiency “Tarsheed", which aims to reduce at least one million tons of emissions annually until 2022.

In early 2019, KAHRAMAA announced a public tender for what will be the first large photovoltaic electric power plant in Qatar. After prequalifying 16 international companies, it received five competitive offers.

KAHRAMAA was advised by a consortium of consultants led by Ernst & Young as financial consultant, DLA Piper as legal consultant and Poyry as technical consultant.

This is the second Independent Power Producer (IPP) project in Qatar in which Marubeni is involved.

Marubeni is a shareholder in M Power, alongside Qatar Electricity & Water Company, Qatar Petroleum and Jera. Jera was established in 2015 as the equal joint venture of two major Japanese electricity companies, Tokyo Electric Power Company and Chubu Electric Power Company.

Jera is an energy company with global reach that has strength in the entire energy supply chain, from participation in liquefied natural gas and other fuel resource projects and fuel procurement, through fuel transportation to power generation.

M Power owns the Mesaieed Power Plant, which is a 2,000MW gas fired combined cycle IPP project which has been in operation since 2010.

Elsewhere in the region, Marubeni holds a stake in the 1,177MW Noor Abu Dhabi Solar PV IPP project located at Sweihan, alongside Jinko Solar of China, and Abu Dhabi Power Corporation. Power generated from the Sweihan project is sold to the Emirates Water and Electricity Company under a 25-year PPA.

The US$871 million Noor Abu Dhabi project was also backed by Japanese banks, including MUFG Bank, Norinchukin Bank, and Sumitomo Mitsui Banking Corporation.

Marubeni has plans to develop more large scale solar plants across the MENA region. Globally, it has more than 11.5GW of net IPP generation assets across 19 countries.

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