GCC experts discuss funding challenges for power projects

Project financing will continue to remain the single largest challenge for independent water and power project (IWPP) companies operating in the GCC even as several high profile utilities' projects are being announced across the region to satisfy the increasing hunger for water and power.
This important topic was highlighted by leading industry authorities at a press conference held in Dubai Tuesday. The experts pointed out that even as utilities' providers explore the most competitive options to secure funding for their projects, the role of private capital was still not completely understood or often viewed with skepticism.
“The regional utilities' sector is trying to keep pace with the demand for power and water, but with the high number of projects being announced by governments in the region, private equity can help the developers to complete their projects on time and at less risk to governments,” said Nick Carter, director general, Regulation and Supervision Bureau, the independent regulatory body for the water, wastewater and electricity sectors of Abu Dhabi.
The press conference was held on the eve of the 2nd Global IWPP Summit scheduled to take place in Ras Al Khaimah from Nov. 24 to 26, with the support of Sheikh Saud bin Saqr Al-Qasimi, Supreme Council leader and ruler of Ras Al-Khaimah.
Organized by Fleming Gulf, the summit will discuss the issues and challenges affecting IWPPs across the globe.
“The availability of project capital also depends on local market conditions and the specifics of the project,” pointed out Daniel Zywietz, managing director, Ambata Capital Middle East and CEO of Enerwhere, a Dubai-based provider of solar off-grid and temporary power solutions that are structured as Independent Power Projects (IPPs).
“Financing a government-backed IWPP in Oman or Saudi Arabia is relatively easy, as local banks in these countries have a lot of liquidity and investors trust their track record of successful IWPPs,” he added.
According to Zywietz, it nevertheless remains possible to finance such projects. “In times of single digit interest rates, many investors are actually looking for the higher yields that projects in less established markets can offer, and consequently we are seeing a lot of interest in our solar IPP structures in both the Middle East and Africa,” he said.
Ruurd Abma, MD, Utico Middle East, said as IWPPs rushed to satisfy the growing demand for power and water in the region, they were always faced with the challenge of obtaining capital for new projects. “While private equity can help, we are seeking terms that can also be beneficial to the IWPPs.”
Samir Ahmed, senior marketing manager of Fleming Gulf, said the upcoming summit would throw light on pertinent issues affecting the IWPP sector, with the aim of developing workable solutions. “By creating this platform, we are providing all parties an opportunity to voice their concerns and solutions,” he added.
Speakers at this year’s IWPP Summit include Majan Electricity Company (Saudi Arabia) CEO Ahmed bin Saif Al-Mazrouy and Water and Electricity LLC (Saudi Arabia) CEO Abdulrazzaq Hijan.