ACWA Power looks to raise more funds next year

After raising $814 million in a bond issue in May, Riyadh-based ACWA Power expects to return to the debt market in 2018, chief executive Paddy Padmanathan told Argaam in an interview.

Padmanathan said the credit facilities were being set up so that the company would be fully prepared to take advantage of any investment opportunity that came along. “We just want to be well-prepared, well-capitalized in order to take advantage of what is coming,” he said.

Meanwhile, he plans to invest most of the proceeds from the bond issue locally. Half of the money raised was used in refinancing or retiring pre-existing facilities in the Kingdom, he added.

Much of the other half is also expected to be invested in Saudi Arabia. “But we are also growing internationally so we'll continue to do (financing),” Padmanathan said.

As oil-rich Saudi Arabia looks to diversify its energy mix under its Vision 2030 initiative, ACWA Power expects to become a key player in the shift.

Earlier this year it was shortlisted to bid for a 400 megawatt (MW) wind farm and a 300 MW solar project in the Kingdom, which together constitute the 700 MW tendered under the first round of the National Renewable Energy Program (NREP).

The Kingdom is aiming to generate 9.5 GW of renewable energy by 2023.

ACWA Power also is currently working on a bid for a wind farm after Saudi Arabia invited developers last month to submit prequalification proposals for the project which will be located in the Al Jouf region.

Padmanathan expects the preferred bidder to be selected early next year.

The company is also preparing a bid for the 300 MW Sakaka solar project but is yet to decide if it will bid as part of a consortium.

“That gets decided much later in the process for us. It's a large project on paper, but at the same time, it's not massive. We can do it by ourselves,” the chief executive said.

Overseas projects

ACWA Power’s Singapore-based joint venture with South Korea’s Taekwang Power Holdings, Nam Dinh First Power Holdings, was recently granted an investment license by the Vietnamese government to build a $2.3 billion thermal power plant in Vietnam.

“We are at a very advanced stage there. We have completed the power purchase agreement negotiations… and the land reclamation process has begun at the site,” Padmanathan said.

The company is currently putting the financing together, the bulk of which is expected to come from Korean institutions such as the Export-Import Bank of Korea and Korean Trade Insurance Corporation.

“We're hoping everything will come together in the first quarter of next year. Our target is to go into construction towards the end of the first quarter of next year.”

Elsewhere, ACWA Power expects to sign power purchase agreements soon on a few renewable energy projects in Egypt, of about 50 MW each.

“We expect a couple of those to be signed up this year. We're working to financially close them this year, and go into construction. So those will be our first assets in Egypt,” the CEO said.

The Saudi company is also in discussions with the Egyptian government for the Dairut project, a 2,250 MW combined cycle gas-fired power plant.

The project, for which ACWA Power was selected as the preferred bidder, was halted during the Arab Spring uprisings in Egypt, but is now being revived.

“I think it'll take us probably the rest of the year to complete the contract documentation and negotiations, but we fully expect to go into financing early next year,” Padmanathan said.

Funding will likely come from export credit agencies and international financial institutions, like the Overseas Private Investment Corporation (OPIC).

New markets

Among plans to venture into other markets is Indonesia which Padmanathan said is a “logical extension” for the firm beyond Vietnam in Southeast Asia.

In Vietnam, the company has already started to look at its next venture, a 100 MW solar photovoltaic (PV) project.

“We've entered into a partnership with FECON, a Vietnamese company who actually identified that project, and we have now stepped in to partner with them and take it forward,” he said.

The company is also interested in expanding in Africa, using its presence in Morocco and Egypt as a base to grow further in the continent, he added. 

Write to Jerusha Sequeira at jerusha.s@argaamnews.com