Kuwait’s NBK Issues Commitments for Groups in Zour North Bids

Five groups are bidding to build Kuwait’s Al-Zour North power plant, according to National Bank of Kuwait SAK, which is seeking to finance the project with a price tag of as much as $3 billion.

The bank, the country’s biggest lender, has issued bid bonds for four of the five groups, Shaikha al-Bahar, NBK Kuwait’s country chief executive officer, said in a phone interview from Kuwait City.

“We are committed, we already gave the four consortia commitment to finance, of course subject to full due diligence, but we are already committed,” al-Bahar said. “NBK provided the four consortia with commitment letters to finance the project.” The bank played a “major role as financier” as part of a group of international banks, she said, without identifying the other financial institutions involved.

Kuwait, the fifth-biggest producer in the Organization of Petroleum Exporting Countries, in March issued a tender for construction of the Al-Zour plant, one of the country’s biggest electricity supply projects. The five bidding groups include Mitsui & Co., Marubeni Corp., GDF Suez, Saudi-based ACWA Power International and Malaysia’s Malakoff International, al-Bahar said.

The combined generation power plant will have a capacity of 1,500 megawatts and use 100 million imperial gallons of water a day. The country plans to choose a bidder by the end of this year.

Kuwait’s government plans to hold a maximum of 10 percent of the company responsible for building the plant, while a strategic investor will hold 40 percent. The remaining 50 percent will be sold in an initial public offering.


The government will sign a 40-year energy conversion and water purchase agreement for the project, with capital recovery payments to be received over the first 25 years, according to al-Bahar. The project is to be funded through 80 percent debt and the remainder as equity, she said.

“Currently all bids are with the PTB for evaluation,” al-Bahar said, in reference to the Partnerships Technical Bureau, which oversees the government’s Public-Private Partnership program. “Some bids include Kuwaiti dinars and US dollar-financing, and we believe dinar financing will be more attractive,” she said.

Al-Zour North, to be built in the south of the desert Gulf state, is expected to start operations at the beginning of 2014. The project is part of the country’s 30.8 billion dinar development plan aimed at modernizing and restructuring Kuwait’s oil-based economy.

The plan involves boosting energy production, construction of a rail network and metro, airport expansion, new cities, hospitals, roads and a port on Boubyan Island.

BNP Paribas SA is financial adviser for the project and part of a group overseeing its implementation.

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