Saudi Aramco Power Company Invests in Sudair One Solar PV Project

Posted on 08/15/2021


Saudi Aramco Power Company (SAPCO) is a unit of oil giant Saudi Aramco. Saudi Aramco Power acquired a 30% stake in the special purpose vehicle Sudair One Renewable Energy Company In addition, Riyadh-based ACWA Power will take a 35% stake in Sudair One Renewable Energy. Water & Electricity Holding Co. (Badeel) is taking a 35% stake in Sudair One Renewable Energy. Saudi Aramco is evaluating potential projects with partners to make investments in renewable energy projects.

Badeel is owned by Saudi Arabia’s Public Investment Fund (PIF). ACWA Power is 50% owned by PIF.

The US$ 907 million Sudair solar PV plant is the first project under PIF’s renewable energy program. The investment supports Saudi Arabia’s energy transition into renewable energy and is Saudi Aramco’s first investment in the program. There is a 25-year power purchase agreement for the Sudair plant was signed with the Saudi Power Procurement Co. With an investment value of SAR 3.4 billion, Sudair Solar PV project, which is located at Sudair Industrial City, is set to become one of the largest single-contracted Solar PV plants in the world and the largest of its kind in Saudi Arabia.

“While hydrocarbons will continue to be a vital part of the energy mix for decades to come, renewables like solar have an important role to play in helping achieve the world’s climate goals,” Mohammed Al Qahtani, senior vice president of downstream at Aramco, said in the statement. “Sudair will support Saudi Arabia’s ambition to generate part of the nation’s power needs from renewable energy by 2030, and is one of several low-carbon energy options being deployed by Aramco.”

Financing
The financing for the project is based on the principles of limited recourse project financing, with the senior debt structured as a soft mini perm facility with a tenor of 28 years and both conventional as well as Islamic tranches. The financing structure also features a set of equity bridge facilities provided by local and international banks supporting the sponsor group’s equity investment in the project.

The financing group includes Mizuho Bank, Ltd., Riyad Bank, Korea Development Bank, Arab Petroleum Investments Corporation (APICORP), Al Rajhi Banking & Investment Corporation, and Standard Chartered Bank as senior lenders and Mandated Lead Arrangers. The equity bridge facilities are provided by Bank Al Bilad, Saudi British Bank, and SMBC International Plc.

The EPC agreement for the construction of the Sudair Solar PV was signed with Larsen & Toubro in April 2021.

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