The Jubail-Buraydah Independent Water Transmission Pipeline Project in Saudi Arabia, estimated to cost 8.5 billion riyals ( US$2.25 billion ), has reached financial close.

The project is being implemented by the Stream Water Transmission Company, a joint venture formed by Al Jomaih Energy & Water Company ( 45% ) with Buhur for Investment Company ( 35% ) and Nesma Company Limited ( 20% ). Pinsent Masons advised Stream Water.

The project will be entirely supported by Islamic financing, which is a rarity for such large-scale projects.

Senior financing, worth US$1.7 billion, will comprise three distinct Islamic financing structures provided by Abu Dhabi Commercial Bank, Arab Petroleum Investments Corporation, the Saudi Investment Bank, First Abu Dhabi Bank, Saudi Awwal Bank, Bank Al Jazira, and Al Rajhi Bank. The National Infrastructure Fund and Arab Energy Fund will also participate.

According to Pinsent Masons, which advised Stream Water, the mix of senior Islamic lenders from the United Arab Emirates and Saudi Arabia added to the complexity and novelty of the deal: the financing documents had to cater to each senior financier’s Shariah regulatory requirements and also needed to be bankable to the entire cohort of senior financiers.

The project was tendered by Saudi Water Partnership Company ( SWPC ) under its third round of procurement for water transmission pipeline projects. Developed under a “build, own, operate, and transfer” ( BOOT ) model, the project has a 35-year concession period with a four-year construction phase. It is expected to start commercial operations in 2029.

The pipeline will transport potable water from the Eastern Province to the Qassim Region, with the capability for reverse flow operations to ensure operational efficiency and continuous water supply throughout the year, in line with the plans of the Ministry of Environment, Water, and Agriculture. The pipeline will have a transmission capacity of 650,000 cubic metres per day and a length of 587 kilometres.  

Pinsent Masons also advised on equity bridge financings in excess of US$600 million involving Al Bilad Bank, Al Rajhi Bank, and Saudi Investment Bank, all provided by way of specific Islamic finance structures. 

"This transaction reflects the growing sophistication and scale of water project financing in KSA, highlighting the importance of the private sector’s participation in the water sector development in the kingdom, in line with the goals of Vision 2030," says Pinsent Masons partner Gurmeet Kaur.