Oman-based Sohar International Urea and Chemical Industries (SIUCI) last week signed a $440 million (Dh1.6 billion) loan agreement with Japan Bank for International Cooperation for the Sohar fertiliser project, a company official said.

Shaikh Suhail Bahwan, the Omani tycoon, is promoting the $650 million (Dh2.3 billion) Sohar fertiliser project, and it is being built by Mitsubishi Heavy Industries at Sohar Industrial Port Area.

"We expect to start production 36 months from now," said Suresh Shivdasani, SIUCI managing director.

Shivdasani was speaking on the sidelines of the signing ceremony at the Al Bustan Palace Hotel. The loan term is ten-and-half years, he said.

SIUCI will start paying back after the production starts in 2008.

SIUCI has already entered into a long-term take-or-pay urea offtake agreement with US-based Transammonia Inc.

Take-or-pay refers to a contract where the purchaser must purchase the product offered to it at an agreed price, or pay a certain amount if it refuses to take the product.

Urea is a substance used in the production of fertiliser.

"We have signed the agreement with Transammonia, but the urea produced here would be supplied to Europe, Asia and the United States," Shivdasani said.

The lenders also signed direct agreements with Transammonia and Mitsubishi Heavy Industries.

"In the last 18 months, JBIC [Japan Bank for International Cooperation] has approved four projects in Oman and this is clear proof that Oman and JBIC maintain strong relations," said Takayuki Yamada, senior executive director of JBIC.

Oman is the one country in the region where JBIC has committed financing on a project basis for two projects, Yamada said.

Fact box

Major private sector greenfield facility

  • The Sohar fertiliser plant will have a capacity of 1.225 million tonnes per annum of granular urea, which will be exported to global markets.
  • The project represents one of the largest private sector greenfield fertiliser projects in the world, says a press statement issued by Sohar International Urea and Chemical Industries.
  • It is the largest industrial investment by an individual in the GCC, it says.