Poseidon has closed the $922 million financing and secured all funding needed for the project
Concurrent with the financial closing, Poseidon has given the notice to proceed to the joint-venture company that will design, construct and start up operations at the plant, as well as construct a 10-mile pipeline that will deliver the approximately 50 million gpd of treated water produced by the plant into San Diego County’s water system.
Done in partnership with the San Diego County Water Authority, the project financing is one of the largest project-specific financings for new water assets in the U.S.
Poseidon and the water authority brought together numerous qualified parties that worked collaboratively to drive the project to this historic moment. The project-specific structured deal assigns responsibility and accountability to the appropriate parties, which protects San Diego, Calif., ratepayers while mitigating the risk to investors.
Kiewit Shea Desalination will provide engineering, procurement and construction (EPC) services for the desalination plant and the pipeline under a fixed-price contract. IDE Americas Inc. will design the seawater process plant under the direction of Kiewit Shea Desalination. IDE will also be responsible for the operation and maintenance (O and M) under a 30-year contract.
The signing of the EPC and O and M contracts coincided with the close of the sale of $734 million in tax-exempt bonds issued by the California Pollution Control Financing Authority on behalf of Poseidon and the Water Authority, with underwriting led by JP Morgan. Private equity investor Stonepeak Infrastructure Partners provided the remainder of the project capital.
Under the terms of the Water Purchase Agreement between Poseidon and the San Diego County Water Authority, the agency pays only for delivered product that meets its stringent quality standards. This ensures Poseidon has significant incentive to avoid construction delays, plant downtime, labor disputes and inefficiencies—costs that Poseidon would absorb if incurred.
Construction is set to start immediately, with commercial operations commencing in 2016. The project will create 2,300 jobs during construction and will support more than 575 jobs for the life of its operations.