The green financing includes an Islamic tranche of 60% of the total facility
ACCIONA, a leading company in the development of water and other sustainable infrastructure, together with its local partners Tawzea and Tamasuk, has closed green loans totaling $480 million for three independent sewage treatment plants (ISTPs) in Saudi Arabia.
These new water treatment contracts have been awarded by the state-owned Saudi Water Partnership Company (SWPC).
With the financial close of these projects, ACCIONA takes a further step in its commitment to sustainability and innovation. For the first time in its water projects, the company is structuring not only a green loan but also an Islamic financing.
The financial close of these three ISTPs at the same time, in only six months, is a major milestone in the water sector, as a result of the joint work between SWPC and the Project Companies.
The financing syndicate for Madinah-3, Buraydah-2 and Tabuk-2 includes local, regional, and international lenders. The financing structure incorporates an Islamic tranche for 60% of the value of the loans structured as an “Ijara Facility”, or Islamic leasing. Investors and financial institutions are increasingly allocating capital to green infrastructure projects such as water treatment plants.
The Project Companies developed a Green Loan Framework in accordance with Green Loan Principles 2021 of the Loan Market Association, the Asia Pacific Loan Market Association, and the Loan Syndications & Trading Associations. Under this framework, the green loans will finance expenditures related to the wastewater treatment projects. S&P Global Ratings has certified the finance for these projects as green, in compliance with best practices.The three ISTPs will treat the wastewater of up to 2 million inhabitants and contribute to national efforts to conserve and reuse water, in accordance with Saudi Arabia’s Vision 2030, its blueprint for sustainable development and economic diversification. Vision 2030 places a particular focus on optimizing the use of renewable water resources for agriculture purposes, and improving the efficiency of municipal and agricultural water consumption.
Key environmental features of the ISTP Projects include the recycling of wastewater for agricultural activities; the treatment and reuse of sewage sludge for agricultural use as fertilizer and also for cement manufacturing (‘zero-sludge-dispatch’ method); and the use of renewable electricity to power the wastewater treatment plants.
The quality and quantity of treated water will comply with stringent technical requirements to meet the needs of local farmers for irrigation. ACCIONA will carry out baseline environmental surveys and develop a full Environmental and Social impact assessment (“ESIA”) for the plants.
Investors and financial institutions are increasingly allocating larger volumes of capital to green infrastructure projects, with a clear focus on water projects. Madinah 3, Buraydah 2 and Tabuk ISTP projects, developed by ACCIONA in Saudi Arabia are just some examples of this trend that is rapidly growing globally.
Tamasuk is a diversified infrastructure developer and investor, headquartered in Riyadh and invested across clean energy, utilities, healthcare, education, and digital infrastructure.
Once completed, Madinah 3 will serve up to 1.5 million inhabitants of existing and future residential areas near the city of Madinah. It will have an initial treatment capacity of 200,000 m3/day, which can be expanded to 375,000 m3/day. Buraydah 2 will serve up to 600,000 people and support the projected growth of the city and the nearby town Ash Shimasiya, It will have a capacity of 150,000 m3/day. Tabuk 2, serving up to 350,000 people, will have a capacity of 90,000 m3/day. It will serve mostly existing and future residential areas in conjunction with Tabuk 1 ISTP, which is currently operational.
The treated water will replace the use of fresh water resources for farming, saving this scarce resource and contributing directly to the nation’s water security. Daily water savings are expected to amount to 190,000 m3/day at Madinah 3, 142,500 m3/day at Buraydah 2 and 85,500 m3/day at Tabuk 2. About 95% of the treated wastewater will be available for agricultural use, with the remaining 5% used at the treatment plants. A small amount will be lost during the sludge drying process.