Consortium closes project financing for Saudi sewage treatment plants

The consortium of Acciona Agua, Tawzea and Tamasuk have closed the project financing for the development of three independent sewage treatment plants in Saudi Arabia.

With Saudi Arabia’s population expected to grow from 35 million today to around 40 million by 2026, the Kingdom needs to expand its basic infrastructure, including sewage treatment facilities.

In line with this, since the launch of its National Water Strategy published in 2018, Saudi Arabia has committed to billions of dollars in investments in desalination and wastewater treatment projects.

The latest round of projects announced sees more than 60 water projects, worth SR35 billion ($9.33 billion), approved by the state-owned Saudi Water Partnership Company (SWPC).

Among the larger projects, the Madinah 3 (375,000m3 per day), Buraydah 2 (150,000m3 per day) and Tabuk 2 (90,000m3) projects are being undertaken by a consortium comprising Acciona Agua, Tamasuk and Tawzea. The projects, procured on a PPP basis, will be developed on a long-term build, own, operate and transfer basis.

Total financing of $700 million for the three independent sewage treatment plants has been secured from Abu Dhabi Islamic Bank, Alinma Bank, Riyad Bank, Siemens Bank and MUFG Bank, who were represented during the transaction by Eversheds Sutherland and AlDhabaan & Partners, among others.

Around $480 million of the total financing has been provided in the form of green loans, with key environmental features of the projects include the recycling of wastewater for agricultural activities; the treatment and reuse of sewage sludge for agricultural use as fertilizer and for cement manufacturing; and the use of renewable electricity to power the wastewater treatment plants.

Acciona Agua, Tawzea and Tamasuk meanwhile were advised by Deloitte (financial and strategic advice) and Pinsent Masons (legal advice).

Deloitte was on board throughout the full process from the bid submission through to financial close. “We advised the consortium through the transition away from LIBOR based financing to close on Secured Overnight Financing Rate (SOFR) and assisted with the tariff adjustment mechanism.”

“We also supported on arranging the designation of green financing, facilitated the hedge execution and were significantly involved in driving the process to financial close,” explained Robin Butteriss, Partner and Corporate Finance Advisory Leader at Deloitte in the Middle East.

Once completed, the three projects will increase the desalination capacity to 7.5 million cubic metre of water per day by 2027, from 2.54 cubic metre per day in 2021 – nearly tripling the capacity in just six years.

The dealmakers

The Eversheds Sutherland team was led by Ashley Halewood, supported by Benjamin Clark and Leith Gouta. The AlDhabaan & Partners team was led by Anmar Al Gharifi and Sikander Nafees Siddiqui.

The Pinsent Masons team advising the consortium was led by Gurmeet Kaur and David Platt, with Ibrahim Alajaji and Abdullah Algowaiz from Pinsent Masons’ Saudi association firm Al Sabhan Alajaji providing the local law expertise.

Other dealmakers that worked on the transaction were at the time of writing unknown.