First Large U.S. Export Finance Transaction with Bahrain Since U.S.-Bahrain Free Trade Agreement Signed
FOR IMMEDIATE RELEASE August 27, 2009
Marianna Ohe (202-565-3200)
WASHINGTON, D.C. - The Export-Import Bank of the United States (Ex-Im Bank) has approved a $230 million direct loan to support the sale by General Electric International Inc. (GE) of gas and steam turbines and related equipment for a combined cycle power generation plant with sea water reverse osmosis and desalination facility in the Kingdom of Bahrain.
GE will provide four 9FA gas turbines, two C7 steam turbines, and ancillary equipment and services to Al Dur Water and Power Company (Al Dur) to build a 1,234-megawatt combined cycle power plant and a 48 million-gallons-per-day drinking water desalination facility on Bahrains southeast coast. The combined-cycle power plant will use natural gas as primary fuel and fuel oil (diesel) as contingency. It is Ex-Im Bank's first project financing of a combined water and power facility.
This is Ex-Im Bank's first large transaction in support of U.S. exports to Bahrain since the two countries signed a Free Trade Agreement in 2006, said Ex-Im Bank Chairman and President Fred P. Hochberg. The transaction is in part a result of the many visits to the region made by Ex-Im Bank Director Bijan Kian, whose portfolio includes the Middle East.
There are more opportunities for U.S. export of goods and services to the Kingdom of Bahrain, said Kian. While this transaction serves the power sector, there are also opportunities for U.S. exporters in the financial and health sectors and possibly others.
The support of the U.S. Ex-Im Bank in the financing of the Al-Dur Power & Water project together with the strong participation of other international banks were major contributors towards achieving financial close for the project despite the prevailing conditions of global credit markets, said H. E. Sh. Ahmed Al-Khalifa, Minister of Finance, Kingdom of Bahrain. It also helped the G.E. consortium, led by GDF Suez and Gulf Investment Corporation, to secure the deal in what was a very competitive and transparent bidding process. We greatly appreciate the involvement of Ex-Im Bank in one of the key infrastructure projects in the kingdom of Bahrain and look forward to further cooperation in our future development plans.
The Al Dur project was to be financed by a private $1.5 billion commercial debt facility. However, in the face of tight global liquidity, private banks reduced their participation in the project and switched from long- to medium-term financing that will necessitate a refinancing during the first five years of debt repayment. To help fill the gap, Ex-Im Bank is extending a 10-year loan and the Korean Export Insurance Corporation (KEIC) will be making a shorter term loan of $275 million.
The Ex-Im Bank loan was approved by the Bank's board of directors -- and loan documents were signed -- less than five months after the initial application to Ex-Im Bank by Al Dur. The facility involved some creative structuring in consideration of the tight credit markets, particularly for large, long-term transactions, said John A. McAdams, Ex-Im Bank senior vice president, Trade Finance.
The total cost of the project is estimated at $2.1 billion. The Ex-Im Bank loan also covers local costs related to the project and interest during construction.
Ex-Im Bank is the official export-credit agency of the United States. The independent, self-sustaining federal agency, now in its 75th year, helps to create and maintain U.S. jobs by financing the sale of U.S. exports, primarily to emerging markets throughout the world, by providing loan guarantees, export-credit insurance and direct loans. For more information, visit www.exim.gov.