*

IFC said to provide up to $250 million for Oman project

*

United Solar has links to China via CEO, shareholders

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U.S. objects, Germany, Netherlands, Nordic countries

abstain,

sources say

(Adds second source, details on Oman polysilicon project

ownership, China connections, from third paragraph)

By David Lawder

Aug 8 (Reuters) - The World Bank's International Finance

Corporation on Friday approved a loan and investment worth up to

$250 million in a polysilicon manufacturing project in Oman for

solar power applications, over the objections of the IFC's U.S.

executive director, two sources familiar with the board vote

said.

Three other executive directors on the IFC board abstained

from the vote on the United Solar Polysilicon project, including

those representing Germany, the Netherlands and Nordic

countries, the sources said.

United Solar plans to build a $1.6 billion plant to produce

100,000 metric tons of polysilicon a year in Oman's Sohar Port

Freezone. The company has some links to China, partly through

its chairman and founder, Zhang Longgen, a U.S. citizen who was

previously CEO of Chinese polysilicon maker Daqo New Energy Corp ( DQ )

.

A key United Solar shareholder, Chinese private equity

investor IDG Capital, spent much of last year on a U.S. Defense

Department list of companies with links to China's military

before its removal in December. Other shareholders include Zhang

and Oman's sovereign wealth fund.

A spokesperson for the U.S. Treasury Department, which

manages the United States' dominant shareholding in the World

Bank, did not immediately respond to a request for comment on

the IFC loan.

The World Bank and IFC - its private-sector financing arm -

also did not immediately respond to requests for comment.

IFC intends to provide a loan of up to $200 million and a

preferred equity investment of $50 million, according to its

disclosure sheet on the project.

At full capacity, the United Solar plant in Oman would

produce enough polysilicon annually to supply solar panels

producing 40 gigawatts of power.

China dominates the global production of polysilicon, a key

ingredient in solar panels, and in its higher-purity form, a raw

material for semiconductor production.

The sector is already suffering from massive excess

capacity. Reuters reported last week that Chinese polysilicon

producers are in talks to spend 50 billion yuan ($7 billion) to

acquire and shut down roughly a third of their production

capacity and restructure part of the loss-making sector.

One of the sources said the U.S. and the abstaining

countries viewed the project effectively as a new Chinese

enterprise, supplied largely by Chinese state firms, and adding

to excess capacity in the sector.

The Trump administration, in both of its terms, has pressed

the World Bank to stop lending to China.

The U.S. last year approved a $325 million federal grant to

Michigan-based Hemlock Semiconductor for a major expansion to

produce semiconductor-grade polysilicon to support reshoring of

the chip supply chain.