Funding the future—project finance in the Middle East

Funding the future—project finance in the Middle East

Project finance activity is on the rise in the Middle East say Peter Avery, and Benjamin Goss, partner and senior associate at Clifford Chance LLP. They predict that sharia-compliant project financing structures will continue to feature heavily in the market.

Is 2014 shaping up to be a good year for project finance?

With improved sentiment and additional bank liquidity following the completion of major regional restructurings, we have seen a cautious increase in the level of project finance activity across the Middle East during 2014 and expect that activity to continue. There is still a huge requirement for infrastructure (including power, water and sewerage treatment) across the region. Export credit agencies continue to feature in many of the significant project finance transactions, along with European, Asian and regional banks. There remains an expectation of significant future activity in the renewables sector, particularly the solar market, and this has raised the profile of renewable energy as an alternative energy source in the Middle East. Demand for sharia-compliant project financing structures in the Middle East remains strong, particularly in Saudi Arabia.

Are you seeing any trends emerging in project finance this year?

Sustainable and diversified energy sources have become a key theme across the Middle East. Jordan, Saudi Arabia, and the United Arab Emirates (UAE) are three jurisdictions in the Middle East that are focusing on renewable energy as an integral component in their future energy mix. Saudi Arabia announced an ambitious renewable energy target of 54 gigawatts by 2032, with solar energy expected to constitute approximately 75% of that target. Jordan and the UAE have also been active in the solar space, with the Dubai Electricity and Water Authority (DEWA) currently tendering the 100 megawatt Mohammed Bin Rashid Al Maktoum solar photovoltaic power project expected to be operational in 2017. Dubai's sustainable and diversified energy strategy also extends to clean coal, wit

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