Neom secures financing agreements for green hydrogen plant: KSA’s Neom Green Hydrogen Company (NGHC) has signed several financing agreements worth a collective USD 8.5 bn to fund the development of its utility-scale green hydrogen facility, according to a Tadawul disclosure published yesterday. NGHC is a joint venture between Neom, Acwa Power, and US-based gas supplier Air Products.

Funding breakdown: The investment consists of a combination of long-term debt and equity financing, the statement notes. KSA’s state-owned National Development Fund (NDF) is investing some USD 1.5 bn in the project, while the Saudi Industrial Development Fund (SIDF) is investing USD 1.25 bn. NGHC has also signed long-term loan agreements with 21 local, regional and international banks. Overall, some USD 5.9 bn will be financed with senior debt, and another USD 0.5 bn through mezzanine debt facilities — a hybrid of debt and equity financing — the disclosure notes. It’s reasonable to assume that the rest of the USD 8.5 bn investment consists of equity financing, although the statement doesn’t specify this.

Who else is contributing to the financing? Banks participating in the consortium of financiers included First Abu Dhabi Bank, HSBC, Standard Chartered Bank, BNP Paribas, Abu Dhabi Commercial Bank, Saudi National Bank, KFW, JP Morgan, Korea Development Bank and Credit Agricole.

What we know about the project: The plant promises to be the world’s largest utility-scale green hydrogen facility, producing 1.2 mn tons of green ammonia annually. It will source its power needs from renewable energy projects totaling nearly 4 GW and is expected to be operational in 2026. All of the plant’s output is planned for global export, mainly to the EU and specifically Germany through an exclusive long-term agreement with Air Products, NGHC said.

The project initially cost USD 5 bn: In its 1Q 2023 earnings call last month, Air Products adjusted its overall estimated price tag for the project upward to USD 8.5 bn from the original USD 5 bn due to rising inflation, advance payments for land rights, and USD 1 bn of interest payments on loans to fund the project.

IN OTHER ACWA POWER NEWS- Acwa Power is providing a corporate guarantee to Saudi National Bank that aims to support a USD 100 mn equity bridge loan for Acwa Power subsidiary Shuaibah Holding Company to be used for two of its projects — Al Shuaibah 1 and Al Shuaibah 2 solar PV IPP — according to a Tadawul statement published yesterday. Al Shuaibah 1 (pdf) is an independent water and power project (IWPP) which in its first phase saw the construction of a 900 MW desalination plant capable of producing some 880k m3/day of desalinated water. Planned expansion will see its capacity grow to some 1 mn m3/day. Al Shuaibah 2 is a 2.06 GW solar facility — set to be the largest of its kind in the region — due to achieve commercial operation by 4Q 2025.