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| Monday, Jun 10,2024 |

Signing of a Fourth Loan Agreement for KD 31,250,000 million to contribute to Developing 400 kV Electricity Transmission Networks Project (Fiscal Balance Program)


 

The signing of a Fourth Loan Agreement for KD 31,250,000 million to contribute to the Developing 400 kV Electricity Transmission Networks Project (Fiscal Balance Program)

                        A significant milestone was reached today by signing the Fourth Loan Agreement between the Government of the Kingdom of Bahrain and the Kuwait Fund for Arab Economic Development (KFAED). This agreement, amounting to KD 31,250,000 million (equivalent to about US$ 100 million), is a crucial step in the financing of the Developing 400 kV Electricity Transmission Network Project, a key component of the Financial Stabilization Programme.


 

                        The Fourth Loan Agreement was signed by H.E. Salman bin Hamad Al Khalifa, Crown Prince of Bahrain, on behalf of the government of the Kingdom of Bahrain. Mr. Waleed Sh. Albahar, acting director general of the Fund, signed the agreement on behalf of the Kuwait Fund for Arab Economic Development. Attending the agreement signing was Kuwait’s Ambassador to the Kingdom of Bahrain Sheikh Thamer Jaber Al-Ahmad Al-Sabah, as well as some officials from the Ministry of Finance and National Economy of Bahrain.

                        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 Al Dur2 Power 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 is expected to contribute to achieving the Seventh Goal of the Sustainable Development Goals, which seeks to ensure "universal access to affordable, reliable, modern energy services.", as well as achieving the Seventeenth Goal, which aims to "establish partnerships for achieving goals." "The Project includes the construction of three 400/220 kV substations in the Hadd, Umm Al Hassam, and Riffa areas, as well as a 400 KV interconnection station in the Ras Laqrin area, which will be interconnected to Al Dur 2 Power Plant. It also includes the installation of 400 kV ground cables to connect the new terminals to the existing substations and the national network, the strengthening of the 220 KV network, and the necessary modifications. The Project also includes consulting services.

                        The total costs, including reserves and interest during implementation, amounted to BD 326.2 million, equivalent to about KD 260.8 million, of which about KD 135.5 million in foreign currencies, representing about 52% of the total project cost. This Fourth loan shall cover about %11.6 of the total cost of the Project. It is worth noting that the Project was financed under Kuwait Government Grant No. 62/1 for about US$ 261 million, in addition to the proceeds of the first loan no. 1025 in the amount of K.D. 29.5 million, and to the proceeds of the second loan no. 1046 in the amount of K.D. 30.3 million. Thus, the total contribution of the Fund to the financing of the Project is equivalent to about KD 138.9 million, representing about %54.6 of the total cost of the Project. It is worth mentioning that the loans mentioned above form part of the Fund's outstanding Programme for the Kingdom of Bahrain for the fiscal years 2019/2020 – 2028/2029.

                        The Fourth Loan Agreement, with a term of 20 years and a grace period of 4 years, is a significant financial commitment. It will be repaid in 32 semi-annual installments, the first of which is due after the grace period. The loan carries an interest rate of 2% per annum, with an additional 0.5% per annum fee to cover administrative costs and services related to the loan agreement. These terms ensure a manageable repayment schedule and demonstrate both parties' commitment to the project's successful implementation.

                        The Fund's Fourth loan for the 400 kV Project (within the framework of Financial Stabilisation Programme) represents the 21st loan to be made to the Kingdom of Bahrain, as the Fund has already provided it 20 loans for financing projects with a total value of about KD 240.37 million (equivalent to US$ 769.18 million), of which K.D. 240.21 million were withdrawn, representing about 99.93% of the total value of the loans, have been disbursed, and about K.D. 118.13million, representing about 49.18% of said loans, have been repaid. Moreover, 14 Grants worth about KD 38.4 million (equivalent to about US$ 122.88 million) were provided to the Kingdom of Bahrain, in addition to the Government of Kuwait of US$ 1.5 billion as part of the GCC's Development Programme, which the Fund is administering.

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