Kuwait Finance House (KFH), the country's biggest Islamic lender, said on Tuesday it had obtained regulatory approval to lend up to 500 million dinars ($1.66 billion) to a major project commissioned by a state-run refiner.
KFH would lend funds to Kuwait National Petroleum Company for its Clean Fuels Project, it said in a bourse filing.
KNPC expects to close the first phase of funding, worth 900 million dinars, with local banks as soon as April, its chief executive said last month. National Bank of Kuwait has said it would contribute 600 million dinars.
Since 2015, KNPC has been in talks with banks to raise a loan worth around $10 billion for the scheme, part of Kuwait's 30 billion dinar economic development plan.
Under the project, the capacity of the Mina al-Ahmadi refinery will drop to 347,000 barrels per day (bpd) from 466,000, while Mina Abdulla refinery's capacity will rise to 454,000 bpd from 270,000.
The reduction in the capacity of the Ahmadi refinery, after shutting one of its crude distillation units, will be compensated for by adding new units to produce higher-value products.