Islamic financing package supports development of wind farm in Jordan

The International Finance Corporation (IFC) has set up a financing package to fund the construction of a wind farm in Jordan, it announced Tuesday.

The package, of up to $80 million, will support the 51.75-megawatt (MW) Arbour Wind Farm in the south of the country. The facility is being built by the Abour Energy Company, a joint venture between Xenel International and AMEA Power.

A development institution that focuses on the private sector in emerging markets, the IFC is a sister organization of the World Bank and a member of the World Bank Group.

To date, it has invested over $300 million in Jordan to support clean energy. The financing package for the Arbour facility is made up of a $28 million loan for the IFC's own account and mobilized parallel loans from the Islamic Development Bank.

"Jordan's energy sector has been on a steady path of reform," Mouayed Makhlouf, the IFC's director for the Middle East and North Africa, said in a statement Tuesday. "Supporting renewable energy projects and opening the sector to private investments is a pillar of our work in Jordan and the region," Makhlouf added.

The IFC said it had structured the deal in the form of an Islamic finance Ijara transaction. According to the World Bank, an Ijara transaction involves a bank purchasing an asset on behalf of a client, and then allowing use of that asset for a fixed rental fee.

The Bank adds that ownership of the asset "remains with the financier but may gradually transfer to the client who eventually becomes the owner."

The director general of Jordan's National Electric Power Company, Amjad Rawashdeh, said in a statement Tuesday that its focus was on continuing to diversify energy sources. "IFC's work and investment has been crucial in helping the development of... renewables in the country," Rawashdeh added.

In April, GE Renewable Energy announced it would provide turbines for the development of a 100 MW wind farm in Jordan. The Mass Wind project is due to be operational by the end of 2019 and will meet the power needs of more than 150,000 homes.