Three law firms – Trowers & Hamlins, Denton Wilde Sapte and Shearman & Sterling – have advised on a crucial piece of infrastructure for the developing Omani state, the Salalah independent water and power project (IWPP).
Once the already-delayed project is completed in 2012, the plant is expected to meet growing demand for power and water in the Dhofar region in Oman. The plant will provide 400MW of power and 15m gallons of desalinated water daily.
The state-owned Oman Power and Water Procurement Company turned to Denton Wilde Sapte as its sole legal advisor, to assist with the competitive bidding process and draft project agreements and commercial contracts. Trowers & Hamlins also advised as lead counsel on the second stage of the deal, acting as international and local counsel to the lenders. Omani firm Said Al Shahry Law Office (SASLO), worked alongside PRC firm Century-link to advise China Development Bank at the initial stages of the project financing. SASLO's Alastair Neale and Taimur Malik are advising one of the project’s founder shareholders on certain aspects of the project.
Denton's has been advising the Omani government since 1999 on privatising the state’s electricity and water sectors. London-based head of energy, transport & infrastructure, Christopher McGee-Osborne said that closing the water/power deal had been challenging. “The Salalah IWPP faced particular challenges in today’s difficult project finance market and it’s particularly pleasing to see the confidence the market has in Oman’s electricity market arrangements,” he said.
According to Shearman & Sterling’s Shanghai partner Andrew Ruff, who led the firm’s legal team advising the project lenders (SINOSURE, China Development Bank and the Bank of China), confidence is also coming from the Asia region. “Chinese financial institutions have [a growing interest] in the Middle East and [this deal] continues a trend … by Chinese financial institutions in funding offshore projects,” he said.
Ruff added that his team is currently advising China Import Export Bank (CIEB) which is financing a coal-fired power and mining project in Botswana, while the firm’s New York team is also discussing a number of deals in Indonesia for CIEB.
SASLO is also currently involved in a number of other water, power and infrastructure related projects. "The energy sector in Oman is going through a growth phase with tenders for various projects including ...and this represents both challenges and opportunities for investments in the Sultanate’s energy sector," said Malik.
A Singaporean utilities company, Sembcorp, won the coveted 15-year contract last week to supply power and water for the project. This deal closes as the legal advisors on the latest IWPP in Oman have been announced; Simmons & Simmons last week won the legal advisory contract on the Duqm IWPP
(see story here).
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