Sembcorp upbeat after bagging Salalah IWPP

After UAE and Oman, Singapore-based Sembcorp hopes to replicate their success elsewhere in the Middle East

By V L Srinivasan

Muscat, Feb 13: Backed by strong market demand in the Middle East, Singapore based Sembcorp Industries is now exploring further expansion of its power and water capacity,besides other sectors, in the region.

The company is setting up the 445MW Salalah Independent Water & Power Project (IWPP) in the wilayat of Mirbat, in Dhofar region, the ground breaking ceremony for which was held on February 10.

The project is expected to begin commercial operation in April 2012. Besides power generation, the company will also produce 15 million gallons per day (MIGD) of water to meet the requirements of potable water.

Speaking to Muscat Daily, Sembcorp group president and chief executive officer Tang Kin Fei said that the company has identified the Middle East as a key growth area for its power and water business and has pursued a strategy to position itself as a reliable, long-term partner to help meet the region’s growing demand
for power and water.

“After the UAE and Oman, Sembcorp hopes to replicate this successful model and establish new profit centres elsewhere in the Middle East. Given the growing power and water demand in the area, we aim to strengthen our presence and track record in this key market to build a solid platform of long-term growth for our company,” Tang Kin Fei said. The company established its first beachhead in the UAE with the Fujairah IWPP in 2006.

The Salalah project marks Sembcorp’s second major investment in the Middle East and is the company's first in the growing Oman market.

Addressing a gathering at the ceremony, Singapore's Minister for Environment and Water Resources Dr Yaacob Ibrahim said that the Salalah IWPP was one of the largest utility projects that a Singapore company has clinched in the global market.

Singapore firms have secured over US$130mn worth contracts in Oman and the Salalah IWPP represents the single largest stake by a Singapore company in Oman and increases its investments in Oman seven-fold.
Meanwhile, a company spokesperson said that 75 per cent of the US$1bn project cost
would be met with a 17-year nonrecourse project finance loan and the remaining 25 per cent from shareholders' contribution.

The non-recourse finance will be provided by Standard Chartered Bank (also the financial adviser), Bank of China, China Development Bank, BankMuscat, KfW-IPEX Bank and Sumitomo Mitsui Banking Corporation as Mandated Lead Arrangers, and National Bank of Oman and Bank Sohar as arrangers, the spokesperson added.