KUALA LUMPUR: After an almost decade-long lull, YTL Power International Bhd could finally kickstart a sizable power generation project soon.
According to sources, YTL Power’s 45%-controlled Attarat Power Plant project in Jordan has secured funding from Chinese banks. It marks the final step in a long and arduous trek for YTL Power to become a Jordanian independent power producer (IPP) that began back in 2008 when the project was first mooted.
The US$2.1 billion (RM9.32 billion) oil shale-fuelled power plant will have a gross generation capacity of 554mw.
The US$1.5 billion financing for the project is known as the “Sinosure covered facility” and gets its name from the Chinese Export & Credit Insurance Group, which is insuring the facility.
Construction is expected to start later this year and complete in late-2020. This means earnings will only kick in in financial year 2021.
YTL Power is expected to announce more details of the project as soon as this week.
The project hit a speed bump when the lead sponsor, Eesti Energia from Estonia, decided to take a back seat and reduce its equity stake from 60% to 10% years ago.
Fortunately, China’s state-owned Guangdong Yudean Group Co Ltd chose to take up a 45% stake in the project. YTL Power acquired the remaining 15% stake in the project, raising its stake from 30% to 45%.
Currently, it is understood that YTL Power is the lead sponsor for the project with management control. But it is the Yudean Group that helped to bring in the financing.
The Bank of China and the Industrial and Commercial Bank of China are the lead arrangers for the 75% financing facility with an estimated face value of US$1.5 billion.
Once completed Attarat Power Plant is expected to be the world’s leading oil shale-fuelled power plant, in terms of capacity.
Jordan has one of the largest oil shale reserves in the world with an estimated 40 billion to 70 billion tonnes.
Note, Attarat is a mine-mouth power plant, located close to its fuel source — an oil shale mine. It is understood the mining operations are part of the project
YTL Power has not concluded a new power plant project since 2008 when it acquired PowerSeraya Ltd from Singapore’s Temasek Holdings Ltd for S$3.8 billion.
The group has announced several power projects in the pipeline, like the 1,320mw Tanjung Jati coal-fired power plant in West Java, Indonesia, or the 585mw extension for its combined cycle gas turbine Paka power plant in Terengganu.
However, YTL Power is still seeking financial close for Tanjung Jati and is in dispute with Tenaga Nasional Bhd over the supplemental power purchase agreement for Paka.
Attarat looks to be a lucrative project if all goes well.
The 30-year concession for the project is expected to generate an internal rate of return in the high teens. Furthermore, the project is fully guaranteed by the Jordanian government and is denominated entirely in US dollars.
It is understood that the financing is only for 15 years, including four for construction. That means that Attarat should be able to pay off the borrowings in about 11 years — a rate of return most domestic power companies would envy. Furthermore, Attarat will pay dividends in US dollars, according to sources.