Agricultural Bank of China in A Syndicate Loan Pr…

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Agricultural Bank of China as A Joint Lead Bank in A Syndicate Loan Project for Dubai’s 950 MW Solar Photovoltaic Power Plant

Agricultural Bank of China

Summary: Dubai’s 950MW solar photovoltaic power plant is an exemplar for advancing the carbon emission reduction plan and clean energy transformation for 2050 in the United Arab Emirates. It is a key project of the Belt and Road Initiative, developed and built by Chinese company Shanghai Electric Group Company Limited as the main contractor, invested by the Silk Road Fund, is an important step for Agricultural Bank of China to actively support green projects of the Belt and Road Initiative, help the energy transformation, and ensure power security in the United Arab Emirates.

1. Background and Financial Demand Analysis

The 950MW solar photovoltaic power plant was located in the Maktoum Solar Park in Dubai, including a 100MW molten salt central tower-type plant and three 200MW trough solar thermal plants plus 250MW photovoltaic power plants. The project covered an area of 4,300 hectares. When completed, the project would be the largest single concentrated solar thermal power plant in the world, which could provide green electricity to 320,000 households and reduce carbon emissions by 1.6 million tons per year. It was an important step for the United Arab Emirates to achieve its carbon neutrality target by 2050. On July 20, 2018, the Silk Road Fund and Dubai Electricity and Water Authority (DEWA) exchanged the investment agreement for the project.

The 950MW solar photovoltaic power plant syndicated loan was US $2.5 billion in total provided by a syndicate comprising major Chinese banks, large international banks, and major local banks in the Middle East. Agricultural Bank of China, which was the head of the syndicate, provided a portion of US $ 400 million in loans.

2. Project Highlights

Work closely with engineering contractors. Aiming at supporting the Belt and Road Initiative and circulating the concept of green financing of Agricultural Bank of China, the bank actively carried out follow-up marketing activities after the project information was announced, and worked closely with the Chinese contractors who won the project. Employing the commonly used international syndicated loan model, the bank joined the syndicate as a leading bank and ensured the timely commencement and construction of the project. Most of the units in the project have now been connected to the local grid. The photovoltaic power plants and the No. 1 trough solar power unit are providing electricity to the grid, and the central tower-type unit is expected to be connected to the grid before the end of the year. The project construction runs normally.

Explore local ways to provide financial support of combining equity and creditors’s rights for major projects in the countries along the Belt and Road Initiative. The project was undertaken by Chinese “go global” companies, with financial support from Chinese banks and direct equity investment from the Silk Road Fund, China’s sovereign wealth fund. This financing path combining equity and credit’s rights, in which Chinese financial institution support projects in the country along the Belt and Road, is helpful for Chinese enterprises to enter the clean energy market in the Middle East in the future. It has also increased the influence of the Belt and Road Initiative in the Gulf countries.

Meet the needs of the local country for green energy transformation to increase financial return and social reputation. The project would be the largest single concentrated solar thermal power plant in the world and provide clean electricity to 320,000 households, was a green energy transformation project promoted by the government of the United Arab Emirates. By supporting the project, Agricultural Bank of China’s philosophy of supporting green energy transformation and sustainable development has been recognized by the country, and its social reputation has been greatly enhanced.

3. Achievements and Effects

Agricultural Bank of China has seized the opportunity in China’s Belt and Road Initiative and its strategy of internationalizing the RMB, and actively gave full play to its coordinated platform and extended service in the Middle East and North Africa regions.The project won the Best Electric Power Project Award in the Middle East and Africa in 2019 (Thomson Reuters’s Project Finance International (PFI), an international authoritative journal of project financing),the Renewable Energy Project Financing Award of the Climate Bonds Initiative and the Best Service and Practice Case Award in the China Beijing International Fair for Trade in Services in 2023. It has played a significant role in helping Chinese enterprises enter the clean energy market in the Middle East and in implementing the Belt and Road Initiative in the Gulf countries.

Following China’s plan for green financial development, Agricultural Bank of China has actively implemented the proposal of building the Green Silk Road put forward by the Chinese government, continuously improved the green and sustainable financial management and service system, and promoted the construction of green and renewable energy projects in the Middle East, which has provided more insights and clear objectives for the development of green financial business in the future.

原标题：《Agricultural Bank of China in A Syndicate Loan Project for Dubai》

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