Abu Dhabi Water & Electricity Authority (ADWEA) is in talks with banks about issuing a project bond as early as this year to refinance debt used to construct a power and water plant, two sources aware of the matter said.

The offering could raise up to $350 million and would be classified as a quasi-sovereign issue, as ADWEA is wholly owned by the government of Abu Dhabi, the sources added.

Proceeds from the bond sale will be used to refinance bank debt linked to the Fujairah 1 independent water and power plant, the sources said.

ADWEA did not immediately respond to requests for comment.

The company has invited both local and international banks to pitch for roles in arranging the bond, the two sources said. One said the bond would have a lifespan of 17 years.

Project bonds, or bonds raised in support of an infrastructure project, have been rare in the Gulf region because of their complex structures and because banks had previously been willing to supply cheap long-term loans.

Until last year, Gulf banks were scrambling to deploy cash at ultra-low rates, as they had strong balance sheets aided by high oil prices and rapid economic growth in the region.

However, as oil prices have fallen, hitting their lowest level in six-and-a-half years in August, liquidity has been squeezed in the banking system, forcing borrowers to seek alternative forms of finance, including the capital markets.

The project bond for Fujairah 1 will have a structure replicating that of the $825 million bond which was issued in 2013 to refinance debt backing the Shuweihat S2 power plant, the first source said.

Fujairah 1 is owned by Emirates Sembcorp Water & Power, a joint venture with the ownership split 60/40 between ADWEA and Singapore’s Sembcorp Industries.

The original financing was put in place in 2006 and totalled $1.275 billion.

It runs for nearly 23 years and pays a interest rate of 120 basis points over the London interbank offered rate (Libor) now that it is operational, according to Thomson Reuters data.