WASHINGTON, D.C., June 22 -- The International Finance Corporation (IFC) has approved a US$76 million investment in the Gulf region's first private sector power project. IFC will provide loan and equity financing to United Power Company (UPC) which will build a 90-megawatt electric power plant at Manah, Oman, and approximately 186 kilometers of transmission lines connecting the plant to three towns in the interior and to the main grid at Muscat. UPC will sell electricity to the Ministry of Electricity and Water on the basis of a 20-year power purchase agreement. The project will increase the country's electricity supply, particularly in the interior, and help reduce power shortages. The new plant will use indigenous natural gas fuel to supply power at a lower cost than the diesel units currently used. The project is also expected to encourage the development of capital markets in Oman and the Gulf region because UPC will be listed on the Omani securities market with 40 percent of its equity to be issued to th
e public. UPC is sponsored by the Tractebel Group, the Belgian electric and gas utility, and four Omani enterprises led by the National Trading Company of Muscat. Tractebel and an Omani company will be responsible for operation and maintenance of the plant. IFC's financing package consists of a US$15 million loan for its own account and an equity investment of about US$4 million in UPC. IFC has been appointed by UPC to syndicate additional loans totalling US$57 million with other financial institutions. The total cost of the project is estimated at US$217 million. "IFC will play a key role in mobilizing long-term resources for Oman's first private sector power project," said Everett J. Santos, Director of IFC's Infrastructure Department. "The government's privatization efforts in the power sector should pave the way for more private infrastructure projects in Oman and encourage other countries in the region to allow private investment in the sector." IFC is a member of the World Bank Group and is the largest
multilateral source of equity and loan financing for private sector projects in developing countries. In its fiscal year ended June 30, 1993, IFC approved US$438 million in financing for power projects, the total costs of which were US$1.8 billion.
