A group of banks have been approached by the sponsors of the Shuweihat 2 Independent Water and Power Project (IWPP) to fund a $900 million, nine-month bridge loan, a banking source close to the deal said.

The project is sponsored by Abu Dhabi Water and Electricity Authority (ADWEA), with a 60 per cent share, and GDF Suez, with a 40 per cent share.

A $2.6 billion, 23.5-year financing package that had originally been lined up to back the project was postponed in favour of the smaller bridging loan because of the credit crisis, the banker added.

Current market conditions make it difficult to attract long-term funding in the syndication process.

The banking source said the balance of the required financing and longer-term debt would be raised once market conditions have improved.

In July, Suez won the tender for the project from ADWEA under a 20-year power and water purchase agreement.

The project comprises a 1,500 megawatt natural gas-fired power station and a 454,610 cubic metres a day desalination plant.

 An affiliate of ADWEA, Abu Dhabi Water and Electricity Company, is the sole offtaker from the project, which is scheduled to be completed in 2011.-Reuters