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Tue 17 Nov 2009 02:18 PM

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First Energy Bank to build $1bn Saudi solar plant

Bank plans to build a $1bn polysilicon plant in Saudi Arabia with local partner.

Bahrain-based First Energy Bank plans to build a $1bn polysilicon plant in Saudi Arabia with a local partner to cater to rising regional investments in solar power, the company said on Tuesday.

Polysilicon is used in the production of solar panels. The Gulf Arab region is trying to capture more of its solar and wind energy, thereby reducing its consumption of oil.

Kuwait plans to start a tender competition next year for a solar energy plant that it hopes will one day provide 5 percent of its energy needs, and Saudi Arabia plans to build a two-megawatt solar power plant at its King Abdullah University of Science and Technology (KAUST).

Vahan Zanoyan, chief executive of First Energy, an Islamic investment bank, said the project would cost about $1billion, and be financed through a 40 percent equity stake and 60 percent debt.

Zanoyan said a portion of the debt would be provided by the Saudi government and the bank was in advanced talks with commercial banks to raise the remainder.

Zanoyan also said the project has signed an off-take agreement with U.S.-based Vinmar International covering most of the plant's production capacity of 7,500 tons per year. Production is scheduled to start in 2013.

First Energy is partnering in the project with Saudi industrial group Project Management and Development Co, and said at a later point the project could invest in the production of solar wafers and modules. First Energy focuses on investing in and arranging finance for energy projects in the Middle East. Its shareholders include the Libyan Investment Authority and the Abu Dhabi Water and Electricity Authority.

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