London, 30 Nov 2004 — Shearman & Sterling (London) LLP advised on the development and financing of the Sohar Independent Water and Power Project in the Sultanate of Oman and the Al Ezzel Independent Power Project (“IPP”) in the Kingdom of Bahrain, which signed on 21 November 2004 and 22 November 2004 respectively. On each deal, Suez-Tractebel was co-sponsor (together with local partners) and Shearman & Sterling represented the lenders to each project.
The Sohar transaction involves the development and financing of the design, construction, operation and maintenance of a US$550 million, 585 MW and 33 MIGD power generation and water desalination facility to be located at the Sohar Industrial Port complex in Oman. It is sponsored by Suez-Tractebel and local partners National Trading Corporation, Zubair Corporation, W.J. Towell and Co., Sogex Oman and the Ministry of Defence Pension Fund.
Al Ezzel is the first IPP in Bahrain. The transaction involves the development and financing of the design, construction, operation and maintenance of a US$500 million, 950 MW combined-cycle gas-turbine power plant to be located in the Hidd Industrial Area, Bahrain, and is sponsored by Suez Tractebel and Gulf Investment Corporation, which each owns 50% of the project company.
Both the Sohar and Al Ezzel transactions involved large scale project financings, which were run to concurrent schedules and signed on consecutive days in two different Gulf states.
These transactions were particularly challenging as the firm had to strike a balance between staffing each transaction with sufficient numbers of lawyers while creating efficiencies from an overlap of core team members. There were also time constraints as negotiations commenced in July and were conducted through the summer holiday period, Ramadan and the Eid holiday.
Kenneth MacRitchie, the lead partner on the deal, commented:
“Sohar and Al Ezzel are major projects that will significantly benefit each Gulf state. The Sohar project will significantly increase the availability of potable water in Oman, and the Al Ezzel project will approximately double the total power production capacity in Bahrain.”
The Shearman & Sterling team was led by project development and finance partners Kenneth MacRitchie and Stephen Peppiatt and included, associates Justin Barry, Kate Cooke-Priest, Helen Down, Uzaira Mirza, Greg Page, Shalini Sequeira and Ben Shorten, trainees Tony Robbins and Simon Thomson and legal assistant Ajoy Bose-Mallick. Additional Shearman & Sterling lawyers included Patrick Clancy (counsel, structured products and derivatives) and John Peterson (associate, tax).