Madinah 3, Buraydah 2 and Tabuk 2

Independent Sewage Treatment Plants (“ISTPs”)

The Sponsors: Acciona, Tawzea & Tamasuk

Green Loan Framework

March 2022
Madinah 3, Buraydah 2 and Tabuk 2 ISTPs – Green Loan Framework | March 2022

Table of Contents

1 Introduction to Independent Sewage Treatment Plant Projects .......................... 2

2 Sustainability at the ISTPs.................................................................................. 4

3 Green Loan Framework ..................................................................................... 5

3.1 Use of Proceeds ................................................................................................................. 5

3.2 Process for Project Evaluation and Selection & Management of Proceeds ........................ 6

3.4 External Review .................................................................................................................. 9

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Madinah 3, Buraydah 2 and Tabuk 2 ISTPs – Green Loan Framework | March 2022

1 Introduction to Independent Sewage

Treatment Plant Projects
The three Independent Sewage Treatment Plants (“ISTPs”) namely Madinah 3, Buraydah 2 and Tabuk 2
and their associated infrastructure (“ISTP Projects” or the “Projects”) are being built to expand and
improve wastewater and sewage treatment services in the Kingdom of Saudi Arabia (“KSA”).

The three ISTPs will be owned by three Special Propose Vehicles (the “Project Companies” or the
“Borrowers”) with the following legal entity names:
(i) ISTP Madinah (“Madinah”): Arratil Independent Water Treatment Company
(ii) ISTP Tabuk (“Tabuk”): Aleqad Water Treatment Company
(iii) ISTP Buraydah (“Buraydah”): Desert Well Water Treatment Company

Each of the Project Companies will be structured in the same way, in terms of the stakeholders in the
financing, the engineering, procurement and construction as well the operation and maintenance.

The three ISTPs will have separate financing arrangements comprising (for each Project) of a term loan
and a standby facility (Islamic and conventional facilities) as well as a working capital facility and a value-
added tax facility (the “Facilities”).

The shareholders of the Project Companies are for all three ISTPs:
(i) Acciona Agua S.A (“Acciona Agua”) – 35%
(ii) International Water Distribution Company (“Tawzea”) – 35%
(iii) Tamasuk Holding Company (“Tamasuk”) – 30%

Acciona Agua is part of the Acciona Group, a leader in providing sustainable solutions for infrastructure
and renewable energy projects across the world and is IBEX 35-listed. Acciona Agua was formed in
2005 and is a leader in the water treatment sector and specialises in the design, construction and
operation of waste water treatment plants, drinking water treatment plants, re-use and reverse osmosis
desalination plants. It manages end-to-end services covering every stage in the water treatment process
and provides waste water treatment plant solutions that optimise processes and minimise installation
costs. It has been involved in a number of large scale WWTP or ISTP projects, including the design,
construction and management of the world’s largest WWTP in Atotonilco, Mexico which has a capacity
of 4.3 million m3/day.

Tawzea was founded as a joint venture in 2006 between Amiantit and the Saudi Industrial Services
Company (“SISCO”), who both own a 50% share in Tawzea. Amiantit, established in 1968, is a listed
Saudi company with a worldwide presence specialized in pipe manufacturing. SISCO, established in
1988, is a listed Saudi company investing in ports, concessions and infrastructure projects. Tawzea was
one of the first Saudi companies who participated in the privatization of the water sector in KSA and now
specializes in management of industrial cities and in operation and maintenance of water and
wastewater facilities across the Kingdom. Tawzea’s track record includes the management of 14
industrial cities in KSA including 5 concessions and 9 O&M projects servicing over 300,000 inhabitants.

Tamasuk is a diversified infrastructure development and investment company wholly owned by Al

Blagha Holding for Investments Co (“ABGI”), a marine and industrial conglomerate with 30 years of
history operating in the KSA. Tamasuk currently owns and operates, together with its partners, a portfolio
of renewable energy (wind and solar) projects in the region. ABGI is the holding company for Al Blagha
Group, and invests in all its infrastructure and energy projects through Tamasuk. Al Blagha Group is a
Riyadh headquartered conglomerate which was established in 1990 with a focus on the shipping,
maritime and logistics sectors in the region. The group currently employs around 4,000 employees
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Madinah 3, Buraydah 2 and Tabuk 2 ISTPs – Green Loan Framework | March 2022

across the GCC and Egypt, and has interests in marine and industrial engineering services, maritime
transportation, port services and development, construction, infrastructure development and general
investment activities.

The plants are to be structured as standalone ISTPs and will be developed on a Build, Own, Operate,
Transfer (“BOOT”) basis. The Borrowers have significant experience in developing, investing in and
raising finance for Build, Own, Operate (“BOO”) and BOOT Projects.

The Saudi Water Partnership Company (“SWPC”) will be the procurer and will enter into a Sewage
Treatment Agreement (“STA”) with the Project Companies with a 25yrs operations period from Project
Commercial Operations Date (“PCOD”) and will be the sole off-taker for the Projects. SWPC was
established in 2003 as a LLC in order to facilitate the sale and purchase of water & electricity within the
Kingdom. SWPC’s payment obligations under the STA to the Project Companies will be guaranteed by
the Ministry of Finance providing a sovereign guarantee. In addition, the scope of the Projects includes
the design, development, financing, engineering, procurement, construction, commissioning, completion,
testing, and transfer of:
• the Water Special Facilities 1 to National Water Company (in charge of water supply and
sanitation throughout the Kingdom)
• the Treated Sewage Effluent (“TSE”) Special Facilities (pipeline and equipment) to the Saudi
Irrigation Organization (for Madinah 3 only) and
• the Electrical Special Facilities (electrical equipment of the Projects) to National Grid S.A..

The development, design, construction and operation and maintenance of the Madinah 3, Buraydah 2
and Tabuk 2 ISTPs are expected to have a Guaranteed Influent Treatment Capacity of 200,000 m3/day2,
150,000 m3/day, and 90,000 m3/day respectively in the cities of Madinah, Buraydah and Tabuk. Madinah
3 is the largest project with the longest timeline consisting of a 2.7 years construction period and 25
years operations. Buraydah 2 and Tabuk 2 are expected to have 2.3 year construction periods and 25
years operations. It is of note that these figures represent additional capacity in addition to the existing
STPs.

All three Projects will start construction in Q1/2022 with the PCOD expected to be achieved no later than
1-Oct-24 for Madinah 3 and no later than 2-Jun-24 for Buraydah 2 and Tabuk 2.

1
Interconnection pipe between the existing pumping station and the Influent Lifting Station to allow transfer of flow from the existing Madinah
phase 1 and phase 2 STPs to the new Madinah 3 ISTP and vice versa.
2
SWPC envisage that Madinah will have a capacity to treat 200,000 m3/day initially which could be expanded up to an average daily flow of
375,000 m3/day capacity at a later stage.
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Madinah 3, Buraydah 2 and Tabuk 2 ISTPs – Green Loan Framework | March 2022

2 Sustainability at the ISTPs

The Projects are of strategic importance to KSA and align with a key ambition of the Kingdom’s
Vision 2030, which states: “We will also promote the optimal use of our water resources by reducing
consumption and utilizing treated and renewable water.” The Kingdom’s demand for water is
increasing steadily and this ambition places particular focus on optimising the use of renewable
water resources for agriculture purposes, boost water storage resources and improve the efficiency
of municipal and agricultural water consumption.

Some of the specific key environmental features and benefits of the ISTP Projects include:

1. Recycling of wastewater for agricultural activities

The use of treated sewage effluent will substitute the use of available fresh water for farming purposes,
hence producing direct water savings. Annual water savings expected correspond roughly with the 95%
of the wastewater treated (since that 5% corresponds to internal uses in the ISTP + evaporation during
sludge drying processes).

The plants have been designed to comply with stringent technical requirements regarding the quality and
quantity of discharged water to satisfy the needs of local farmers that will ultimately use the water.

2. Treatment and reuse of sewage sludge (‘zero-sludge-dispatch’ method)

All sewage sludge produced in the plants will be suitable for agricultural application and cement
manufacturing. The plants will handle, transport, and deliver it to the designated Sludge Disposal Area
(particular for each ISTP), so that the amount of non-beneficial sludge that is removed or leaves the
ISTPs Site equals zero.

3. Renewable electricity consumption

28-57% of the daily electricity consumption for the different sites will be supplied from renewable
energy sources on site (solar photovoltaic (“PV”) electricity), resulting in a significant reduction of the
greenhouse gas emissions generated by the ISTPs. This is the maximum renewable energy available
from the extension of land available for the installed capacity of PV panels and the production of biogas
derived from water treatment processes.

Table1: Environmental performance indicators of the ISTPs

Madinah 3 Buraydah 2 Tabuk 2

Annual Wastewater Treated (m³/year) 73,000,000 54,750,000 32,850,000
Annual Water Recycled (m³/year) 69,350,000 52,012,500 31,207,500
Daily Electricity Consumption (kwh/m3) 0.47 0.62 0.57
Renewable Energy Consumption (%) 28 47 57

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Madinah 3, Buraydah 2 and Tabuk 2 ISTPs – Green Loan Framework | March 2022

3 Green Loan Framework

Alignment with the Green Loan Principles

The Project Companies have developed this Green Loan Framework (the “Framework”) in accordance
with the Green Loan Principles 20213 (the “GLP”), administered by the Loan Market Association, Asia
Pacific Loan Market Association and Loan Syndications & Trading Associations, under which the Project
Companies are intending to raise Green Loans specifically to finance expenditures related to the
Projects.

For any Green Loan raised, the Project Companies will adopt the following as set out in this Framework:

1. Use of Proceeds
2. Project Evaluation and Selection Process
3. Management of Proceeds
4. Reporting

The Framework also describes the approach to Second Party Opinion.

3.1 Use of Proceeds

The net proceeds of the Green Loans will be applied solely to finance expenditures related to the ISTP
projects, in line with the eligibility criteria described below (“Eligible Green Projects”) and the permitted
use of proceeds will be defined in the loan documentation for such Green Loans.

Eligible Green Alignment with the Alignment

Project Eligible Project EU Environmental with the UN
Category Objective4 SDG targets5

Sustainable ISTP Projects Sustainable use

water and Financing of the expenditure and project costs, and protection of
wastewater specifically associated with the development, design, water and marine
management construction and operation and maintenance of the resources6
following three ISTPs:

• Madinah 3 located near the city of Madinah in

Saudi Arabia with expected treatment capacity of
up to 200,000m3/day (with the option to expand up
to 375,000 m3/day). PCOD expected to be
achieved no later than 1-Oct-24.

• Buraydah 2 located near the city of Buraydah, in

north-central Saudi Arabia, approximately 400km
from Riyadh with expected treatment capacity of
up to 150,000 m3/day. PCOD expected to be
achieved no later than 2-Jun-24.

• Tabuk 2 located near the city to Tabuk in north-

3
https://www.lma.eu.com/application/files/9716/1304/3740/Green_Loan_Principles_Feb2021_V04.pdf
4
The Project Companies have additionally included a high level alignment with the list of activities included in the EU Taxonomy Climate
Delegated Act (Annex 1): https://ec.europa.eu/info/law/sustainable-finance-taxonomy-regulation-eu-2020-852/amending-and-supplementary-
acts/implementing-and-delegated-acts_en
5
UN Sustainable Development Goals https://www.un.org/sustainabledevelopment/sustainable-development-goals
6
This project category aligns with “12.1 Sewerage - Urban Wastewater Treatment”, as defined by the draft report by the Platform on
Sustainable Finance on preliminary recommendations for the technical screening criteria for the EU Taxonomy - Annex Part B6 section 12.1 as
of the date of this Framework - https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/210803-
sustainable-finance-platform-report-technical-screening-criteria-taxonomy-annex_en.pdf
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Madinah 3, Buraydah 2 and Tabuk 2 ISTPs – Green Loan Framework | March 2022

Eco-efficient western Saudi Arabia with treatment capacity of

and/or circular up to 90,000 m3/day. PCOD expected to be
economy achieved no later than 2-Jun-24.
adapted
products,
production The three ISTPs will recycle at least 95% of the
technologies treated wastewater for agricultural uses, representing
and processes a circular economy approach.

Renewable Financing related to the procurement, installation and Climate Change

energy operation of onsite solar panels Mitigation

The costs related to solar PV prior to PCOD is 4.1 Electricity

expected to be approximately 1-2% of the each generation using
individual ISTP Projects cost. solar photovoltaic
technology
A proportion of the daily electricity consumption for the
different sites will be supplied from renewable energy
sources on site (solar PV electricity), resulting in a
significant reduction of the greenhouse gas emissions
generated by the ISTPs. Renewable energy will make
up 28% of daily energy consumption for Madinah 3,
47% for Buraydah 2 and 57% for Tabuk 2.

In terms of the Facilities, each drawdown made under the

- Term Facilities may only be used for the purposes of (i) financing Project Costs; and (ii) in
respect of the Final Advance, the items specified in the definition of Final Advance Amount;
- Stand-By Facilities may only be used for the purposes of (i) financing Project Costs, but only after
the Term Facilities have been fully utilised; and (ii) financing Approved Stand-By Costs;
- Working Capital Facility may only be used for the Company's general working capital
requirements in relation to the Project.

3.2 Process for Project Evaluation and Selection & Management of Proceeds
The proceeds of the Green Loans issued under this Framework will be solely used to finance
expenditure related to the projects, specifically associated with the development, design, construction
and operation and maintenance of the ISTP Projects.

Proceeds of the Green Loans will be credited to a dedicated account, there will be earmarked project
finance SPV account structure and structured drawdown requirements.

In connection with this Framework, the Project Companies expect that all proceeds will be fully utilized
for expenditures related to the projects at closing of the Green Loans or during the 2.3-2.7yrs
construction period.

The loans will be drawn down in stages throughout the construction phase as determined by the financial
documents. In the event of unallocated proceeds having been drawn down such moneys will be
temporarily be held by the Project Companies in the Project Companies’ ordinary bank accounts or
short-term money markets until deployed to the Projects. For the avoidance of doubt, any net proceeds
will not be invested in fossil fuel related projects.

The plants have been designed to comply with stringent technical requirements regarding the quality and
quantity of discharged water to satisfy the needs of local farmers that will ultimately use the water.

The Company will carry out baseline environmental surveys and develop a full Environmental and Social
impact assessment (“ESIA”) and initial environmental baseline studies to support the ESIA. The ISTPs
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Madinah 3, Buraydah 2 and Tabuk 2 ISTPs – Green Loan Framework | March 2022

will also face revenue deductions for Environmental Persistent Breach Events. Such events are not
expected to occur under the work conditions detailed in the Request for Proposal (RFQ) documentation.
However, the following management actions have been considered to mitigate possible breaches
(beyond defined thresholds):

(i) noise; The main noise control measures have been considered as part of in the design of
the plant, particularly in the early stages of the design. Other mitigation measures are the
installation of acoustic hoods/silencers.
(ii) odour; Includes coverage of the main source elements as well as odour removal based on the
use of Biotrickling Filters for H2S. In case of peak conditions, a tandem Biotrickling Filters-
chemical scrubber has been designed to tackle a wide range of different air compositions to
be deodorized.
(iii) by-products; The design of the automatic screening channels (with one channel in stand by
and another channel protected with a manual screen as extra redundancy) provides extra
protection against breach events.

Other potential additional social/ environmental risks not included within the persistent breach events will
be covered with the following surveys/technical studies:

- Environmental and Social Impact Assessment and ESIA and GAMEP (or its successor) approval;
- Health & Safety study;
- Operational Safety (HAZOP) study for all areas and systems;
- The Construction Environmental Management; and
- Surveys related to the HCIS requirements in accordance with the local regulations.

To demonstrate the performance of the EPC Contract scope and matching of all of the STA’s functional
performance, environmental and reliability requirements, testing will be carried out as a key commercial
requirement. The Project Companies are also required to perform an environmental study to evaluate
the anticipated environmental risks by a consultant certified by the NCEC/GAMEP and obtain the
required permits from the Authority.

3.3 Reporting
Allocation Reporting
The Project Companies will make and keep readily available for the relevant parties up to date
information on the use of proceeds to be renewed annually until fully drawn down, and as necessary
after that in the event of material developments. Should that not for any reason be the case, the Project
Companies will provide a separate Allocation Report(s) disclosing the amount of any unallocated
proceeds, and subsequently a confirmation that the proceeds of any loan have been allocated to
expenditures related to the ISTP Projects.

Subject to the terms of each Facility Agreement, each Advance made under the Term Loan may only be
used for the purposes of financing Project Costs and in respect to the Final Advance, the items specified
in the definition of “Final Advance Amount”, as defined in the Common Terms Agreement.

For each drawdown under the Senior Facilities (Term Loan, Standby Facility and Working Capital
Facility), the Company is required to provide the funders with a certificate from Artelia or such other
independent external advisor (the “Technical Advisor”) in relation to the proposed Advance stating that:

(i) the payment of the Project Costs for which the proceeds of the Advance will be used is in
accordance with the then current Construction Budget;
(ii) the Advance(s) (if any) previously advanced were applied in payment of the Project Costs as set
out in the then current Construction Budget.

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Madinah 3, Buraydah 2 and Tabuk 2 ISTPs – Green Loan Framework | March 2022

The Technical Adviser is appointed in relation to the Project by the Global Facility Agent following
consultation with the Project Companies.

The Project Companies shall also deliver to the Technical Adviser as soon as practicable, and, in any
event within thirty days after the end of each quarter of its financial years, a Project Development Report
for certification. This will include setting out reasonable details of the work carried out and the Project
Costs incurred during the relevant period, and also giving confirmation of compliance with the
Environmental and Social Management Plan and Environmental Laws.
Impact Reporting
The net proceeds of the Green Loans raised with this Framework will be fully used to finance
expenditures related to the ISTP Projects. The expected impact of the projects is outlined below.

Once completed, Madinah 3 will have the capacity to treat an average daily influent of 200,000 m3/day
initially which could be expanded up to 375,000 m3/day capacity, to serve mostly existing and future
residential areas near the city of Madinah. Buraydah 2 will have the capacity to treat an average daily
influent of 150,000 m3/day to support the projected growth of Buraydah and additional house
connections expected from nearby town Ash Shimasiya. Tabuk 2 will have the capacity to treat an
average daily influent of 90,000 m3/day to serve mostly existing and future residential areas in
conjunction with Tabuk 1 ISTP which is currently operational.

The use of treated sewage effluent will substitute the use of available fresh water for farming purposes,
hence producing direct water savings. Daily water savings are expected to amount to 190,000 m3/day
from sewage effluent treated at Madinah 3, 142,500 m3/day from Buraydah 2 and 85,500 m3/day from
Tabuk 2. Water savings expected correspond roughly with the 95% of the wastewater treated (since that
5% corresponds to internal uses in the ISTP + evaporation during sludge drying processes).

All sewage sludge produced in the plants will be suitable for agricultural application and cement
manufacturing. The plants will handle, transport, and deliver it to the designated Sludge Disposal Area
(particular for each ISTP), so that the amount of non-beneficial sludge that is removed or leaves the
ISTPs Site equals zero.

A proportion of the daily electricity consumption for the different sites will be supplied from renewable
energy sources on site (solar PV electricity), resulting in a significant reduction of the greenhouse gas
emissions generated by the ISTPs. Renewable energy will make up 28% of daily energy consumption for
Madinah 3, 47% for Buraydah 2 and 57% for Tabuk 2.

The Project Companies will share with the relevant parties annually from PCOD an Impact Report, which
will outline information on the progress and positive impact delivered by the ISTP Projects.

The reporting may include:

i) a general description of the ISTP Projects;

ii) the EU Taxonomy Environmental Objective pursued with the ISTP Projects;
iii) a breakdown of what is being financed (assets, capital expenditures, operating expenditures,
etc.);
iv) the respective shares of financing amongst the ISTP Projects;
v) information on the impact delivered by the ISTP Projects and when possible, reporting of
quantitative impact metrics (e.g. annual wastewater treated in m3/year, annual water recycled
in m3/year, electricity consumption in kwh/m3, percentage of renewable energy consumption
and avoided GHG emissions) and
vi) information on the methodology and assumptions used to evaluate the impact of the ISTP
Projects.

The Impact Report will include information on the methodology and assumptions used to evaluate the
impact of the ISTP Projects. The Project Companies intend to align, on a best effort basis, the reporting
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with the portfolio approach described in the ICMA Harmonised Framework for Impact Reporting7. The
reporting is also informed by the GRI Standards for sustainability reporting 8 and the Sustainability
Accounting Standards Board (SASB)9 – (Waste Management / Water Utilities & Services standards).

3.4 External Review

The Project Companies have obtained a Second Party Opinion from S&P, an internationally recognised
external verifier, confirming the alignment of the Green Loan Framework with LMA GLP.

The Second Party Opinion will in addition be made available to the funders of the Projects and published.

The Second Party Opinion and the Green Loan Framework will be made available to the funders of the
Projects and published in their respective corporate websites.

7
https://www.icmagroup.org/assets/documents/Sustainable-finance/2021-updates/Handbook-Harmonised-Framework-for-Impact-Reporting-
June-2021-100621.pdf
8
https://www.globalreporting.org/standards/
9
https://www.sasb.org/wp-content/uploads/2018/11/Waste_Management_BFC_2018.pdf; https://www.sasb.org/wp-
content/uploads/2018/11/Water_Utilities_Services_Standard_2018.pdf/
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