The $1.2 billion financing for Abu Dhabi's fourth independent water and power project (IWPP), the Umm Al Nar complex, a combination of debt and equity, will be underwritten by conventional and Islamic banks.

The equity portion will amount to some $440 million. Financial close is set for early July. A general syndication will follow at a later stage, bankers confirmed following a meeting in London last week.

Several international, regional and local banks are part of the lead arranging group, with three Abu Dhabi-based banks involved, including Abu Dhabi Islamic Bank (ADIB), which is underwriting the Islamic tranche of $250 million.

"After underwriting several major project financing deals in the power and water sector in Abu Dhabi, we now have a well established model which works," a senior banker involved with the financing told Gulf News, adding that the deal demonstrates the confidence in the region's projects.

"The debt portion is as high as the previous IWPP, the Shuweihat project, and the current financing is patterned more or less on that," said another banker.

The convention facility will be lead arranged by Gulf Inter national Bank (GIB), National Bank of Abu Dhabi (NBAD), First Gulf Bank (FGB), HSBC, West LB, Sumitomo Mitsui Banking Corporation and ING.

"It is a long-term facility, almost a 17 to 18-year tenor with a step-up pricing structure," added the banker, stating that certain details are in the final stages. "There will be a general syndication, but the amount will be modest."

It is, thus, possible that more local banks will be involved in the financing. The joint alliance of UK's International Power and Japanese companies, Mitsui & Co and Tokyo Electric Power Co, have been selected as the developers.

The formal signing will be held after approval of the Executive Council.

The Umm Al Nar complex currently has power and desalination capacity of some 1100 MW and 100 million gallons per day (mgpd) of water and a further 62.5 mgpd of desalination capacity is under construction at the complex.

The project will comprise purchase of the new 62.5 mgpd capacity and two recently commissioned units of roughly 7mgpd with associated infrastructure and the development, financing and construction of some 1000 MW of new net electricity generating capacity and potentially additional water generation capacity.

Commissioning of the first of the new power units is set for 2005 and the plant is expected to be fully operational by summer 2006.