Shearman & Sterling represented China Development Bank and Bank of China as lenders to the Salalah Independent Water and Power Project (“IWPP”) in Oman. The project is being developed by a consortium of Sembcorp Utilities Pte Ltd and Oman Investment Corporation whose shareholders are the Gulf Investment Corporation, the National Investment Funds Company, State General Reserve Fund of the Sultanate of Oman and BankMuscat. The financing documents were signed on November 20, 2009, with financial close expected within the next one to two months.

Targeted to begin full commercial operations in the first half of 2012, the Salalah IWPP will consist of a gas-fired power plant which will have a net capacity of 445 megawatts and a seawater desalination plant which will employ reverse osmosis technology to produce 15 million imperial gallons per day of water. Set to be the largest and most energy-efficient power and water plant in the Governorate of Dhofar in Southern Oman, the entire electricity and water output from the facility will be sold under the 15-year power and water purchase agreement. The new facility will increase the power capacity in the Dhofar region from 321 megawatts to 766 megawatts, where demand is expected to double over the next six years.

The funding for the project is being provided by a mixture of international banks, Chinese banks and local financial institutions.

Shanghai Project Development & Finance partner Andrew Ruff led the Shearman & Sterling team, working with counsel Nick Wang (Hong Kong-Project Development & Finance) and associates Joseph Tong (Hong Kong-Project Development & Finance) and Simon Thompson (London-Project Development & Finance).

Said Ruff, “This transaction reflects the growing interest that Chinese financial institutions have in the Middle East and continues a trend of strong interest by Chinese financial institutions in funding offshore projects."