A Loan and a Project Agreements were signed today in Manama between the Government of the Kingdom of Bahrain and the Kuwait Fund for Arab Economic Development (KFAED) to provide a loan to the Government of the Kingdom of Bahrain amounting to KD 29.5 million (equivalent to about US$ 100 million) to contribute to the financing for Developing 400 kV Electricity Transmission Network Project (Fiscal Balance Program).

The Loan Agreement was signed on behalf of the Government of the Kingdom of Bahrain by His Excellency Sheikh Salman bin Khalifa Al Khalifa, Minister of Finance and National Economy, whereas, the Project Agreement was singed on behalf of the Electricity and Water Authority by His Excellency Eng. Wael bin Nasser Al-Mubarak, Minister of Electricity and Water Affairs, while the two Agreements mentioned above were signed on behalf of the Kuwait Fund for Arab Economic Development, by H.E. Mr. Abdulwahab Ahmed Al-Bader, Director-General of the Fund.

The project aims to reduce the high currents for the safe operation of the equipment and provide greater flexibility in the network, and the transfer of electricity power reliably and economically, as well as the discharge of energy produced from the planned Ras Laqrin plant at a voltage of 400 kV, and raise the capacity and efficiency of electricity transmission networks and the exchange of electricity with the Gulf Link economically.

The project includes the construction of three 400/220 kV substations in the Hadd, Umm Al Hassam and Riffa areas, a 400 kV interconnection station in the Ras Laqrin area, the installation of 400 kV ground cables to connect the new terminals to the existing substations and the national network, and the strengthening of the 220 kV network and the necessary modifications. The project also includes consulting services.

It also includes switching stations and interconnection station: Construction of 3 transformer stations, supply and installation of the necessary equipment and equipment of breakers and control equipment and protection, and the number of 9 transformers 400/220 kV each with a capacity of 400 MVA, reactors on cables 400, 220 and 21 kV, which adds capacity of the transformer to about 2400 MVA.  In addition to the establishment of a 400 kV connection station in Ras Laqrin and the supply and installation of the necessary equipment and parts of the circuit breakers and control equipment and protection to connect the new role of the production of electricity for the network.

In addition, the project includes the supply and installation of cables and the installation of about 450 kilometers of electrical cables of 400 kV connection between Um Al Hassam, Riffa and 800 MVA terminals per circuit with total cable length of about 150 km.

The project contributes to achieving Sustainable Development Goal 7 on achieving clean energy at affordable prices.

The total costs, including reserves and interest during implementation, amounted to BD 360.8 million, equivalent to about KD 281.5 million, of which about KD 159.1 million in foreign currencies, representing about 56.5% of the total project cost. The total cost of the project, noting that the project was financed under Grant No. 62/1 in the amount of US$ 261 million, thus the total contribution of the Fund to the financing of the project is equivalent to about KD 140.8 million.

The term of the loan is 25 years, including a grace period of 7 years. The loan will be repaid in 36 semi-annual installments, the first of which is due on the first date on which interest or other costs are due, after the period of grace. The interest on the loan is 2% per annum, plus a fee of 0.5% per annum to meet the administrative costs and services of implementing the loan agreement.

The KFAED loan for the 400 kV (Fiscal Balancing Program) project represents the 18^th loan for financing projects in the Kingdom of Bahrain, where the Fund has already provided 17 loans with a total value of about KD 150 million (equivalent to US$ 510 million).  13 Grants worth of KD 33.7 million (equivalent to about US$ 115 million) were provided, in addition to the Government of Kuwait's Grant of US$ 1.5 billion as part of the GCC Program, which is administered by Kuwait Fund.