Saudi, Oman Power Companies Said Refinancing $2.1 Billion Debt

Power companies in Saudi Arabia and Oman are seeking to refinance a combined $2.1 billion of debt at lower costs, according to two people with knowledge of the plans.

Dhuruma Electricity Co., jointly owned by state-controlled Saudi Electricity Co. and GDF Suez Group, is seeking a cut in interest rates of about 1 percentage point on $1.5 billion of loans, said the people, asking not to be identified because the information is private. The Riyadh PP11 Independent Power Project, as the company is also known, wants to extend loan maturities, they said.

Oman’s Sembcorp Salalah Power & Water Co. is seeking to refinance about $600 million of loans at better terms, said the people. HSBC Holdings Plc is advising the company on the financing, originally raised from about six banks, they said.

Companies across the six-nation Gulf Cooperation Council, which includes Saudi Arabia, the United Arab Emirates and Oman, have sought to cut interest rates on their loans over the past two years as borrowing costs declined and banks with excess cash competed to lend. Dubai Duty Free, one of the world’s biggest airport retailers, cut the price on $2.5 billion of loans last year as rates in the loan market were very favorable, it said.

Spokesmen for Saudi Electricity and for GDF Suez in Dubai declined to comment. Spokesmen for Sembcorp Salalah and HSBC also declined to comment.

Riyadh PP11 commissioned a 1,729 megawatt gas-fired power plant in 2013 about 125 kilometers (78 miles) west of Riyadh. Sembcorp Salalah, 40 percent owned by Singapore’s Sembcorp Utilities, spent about $1 billion to build a 489 megawatt power plant in the Dhofar province, which began full commercial operation in May 2012.

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