Jordan Dubai Capital (JD Capital) announced on Thursday the sale of its controlling stake in the Central Electricity Generating Company (CEGCO) to ACWA Power International (ACWA Power) for a total consideration that values 51 per cent of CEGCO at $144 million.
The sale agreement was signed by Ismail Tahboub, chief executive officer of Jordan Dubai Capital, and Mohammad Abunayyan, chairman of ACWA Power.
“This is a strategic partnership as our investment in Jordan is a long term one,” Abunayyan said at a press conference Thursday.
ACWA Power, he added, considers its investment in the company as feasible because there is an increasing demand on power in the Kingdom and a “huge” spending by the government on fuel.
“We want to make the use of fuel more efficient in order to generate more power,” Abunayyan told journalists.
Describing Jordan as a politically, economically and socially stable country, he said: “Jordan has a very suitable environment for attracting investments and this encouraged us to complete the deal.”
He indicated that the company is ready to invest in new plants in the Kingdom.
ACWA Power will focus on optimally utilising equipment at CEGCO’s seven generation plants to increase production of power, he added, noting that CEGCO currently generates 1, 700 megawatts from a mixed portfolio by technology and fuel type.
Noting that investments in the Kingdom are feasible, he said the company is ready for investing in new plants in the Kingdom.
CEGCO, the largest power generator in Jordan, was privatised in 2007 when 51 per cent of its equity was acquired by Energy Arabia, which was established in 2006 by Jordan Dubai Energy & Infrastructure - a wholly owned subsidiary of JD Capital - in partnership with Malakoff and Consolidated Contractors Company (CCC) to meet the growing demand for power generation investment and services in the region.
The other shareholders in CEGCO are the government of Jordan which maintained a 40 per cent stake after the privatisation and the Social Security Corporation which acquired 9 per cent from the government, according to a statement by the Jordan Dubai Capital.
Commenting on the sale, Tahboub said: “Under JD Capital’s stewardship, CEGGO has transitioned from a state owned company to a successful privately owned commercial enterprise. In securing the highest quality operator to manage the next phase of CEGCO’s development, JD Capital has shown itself to be a regional leader in acquiring managing and successfully exiting highly complex infrastructure assets. It is particularly pleasing to have seen strong foreign investor interest for the asset throughout the sale process which culminated in the sale of CEGGO to a highly respected Saudi Arabian company. This proves that the Government of Jordan’s strategy for private participation in the power sector has been successful and that the government continues to be a solid and credit worthy counterparty. We have secured reasonable return on our original investment, which is in line with the low risk nature of infrastructure assets.”
JD Capital was advised on the transaction by Bank of America Merrill Lynch and Allen & Overy.
ACWA Power is a developer, owner and operator of power generation and desalinated water production plants structured on a concession or utility outsourcing contract model co-funded within a limited recourse, project finance framework.
The company, incorporated in the Kingdom of Saudi Arabia, is as a privately owned joint stock enterprise with a paid up capital of Saudi Riyal 3.71 billion.