Saipem AFCONS JV to build deepwater bulk jetty at Sohar
Thursday, 01 Oct 2009
Oman Observer reported that the JV of Italy based international engineering contractor Saipem and leading Indian infrastructure firm AFCONS has been awarded a contract to design and construct a deepwater bulk jetty at the Port of Sohar. The total investment in the project, which also includes a dredging component to be undertaken by Van Oord of The Netherlands amounts to OMR 95 million.
Agreements for both the construction and dredging components of the project as well as the credit facilities were inked here yesterday at a ceremony held at the Grand Hyatt Muscat and attended by high ranking government officials, senior executives of the Port of Sohar, heads of banks funding the project and contractors representatives.
Mr Maqbool bin Ali Sultan minister of commerce and industry & chairman of the Port of Sohar signed the agreements together with Mr Jan Meijer CEO of Sohar Industrial Port Company. The investment will help create a major deepwater jetty at the Port of Sohar to support the bulk shipping needs of Brazilian mining conglomerate Vale, which is currently building a huge iron ore palletizing and distribution centre at the industrial port. With the addition of these 1,380 meters long and 25 meters deep jetty, the Port of Sohar will join a select handful of ports in the world with the capability to receive Very Large Ore Carriers of 400,000 DWT.
Mr Maqbool bin Ali said that the project was a testament to the Port of Sohar’s robust investment appeal notwithstanding the global economic downturn. Despite the still slow recovery of world markets from the financial crisis, this project demonstrates the confidence of the various investors and financiers in the viability of the project and its financial stability over the long term. It also demonstrates confidence in the stability of Oman’s financial system.
He said that the jetty project will be executed by a special purpose project company set up as a subsidiary to Sohar International Development Company which is a 50:50 JV of the shareholders of SIPC, namely the Government of Oman and the Port of Rotterdam. SIDC was set up in 2008 as a sister company of SIPC to invest in port related infrastructure projects, development of Freezone Sohar and other commercial viable and bankable projects.
Significantly, the deepwater jetty project will be financed through an 80:20 debt equity ratio and on a project finance basis without government guarantees or subsidies. Providing the finance for the project is a consortium of six local banks; BankMuscat, National Bank of Oman, BankDhofar, Bank Sohar, Ahli Bank and Oman Arab Bank as well the State Bank of India.
Signing the credit facilities agreement on behalf of BankMsucat, Mr Abdulrazak Ali Issa CEO, remarked that the transaction was the first of its kind in more than a year to achieve financial closure on a project finance basis. The successful closure of this transaction which was substantially oversubscribed attested to the robustness of the project and would serve as a benchmark for future financing deals of this nature.
