Two major utility contracts were awarded recently to international companies.
In the first, Suez Energy International, in a consortium with Gulf Investment Corporation and Arabian Company for Water and Power Projects, signed the Boot (build, own, operate, transfer) contract for a 2,750 MW and 800,000 cu m per day Independent Water and Power Project (IWPP) located in Jubail, north-east of Saudi Arabia.
In the second contract, Swiss engineering group ABB will expand the power grid in Qatar.
In the Boot operation in Jubail, the consortium will own 60 per cent of the project.
The IWPP, awarded by the Power and Water Utility Company for Jubail and Yanbu (Marafiq), will be built to supply water and electricity to industrial and non-industrial customers in the Jubail Industrial City and Eastern Province.
The sale of the plant’s entire energy and water output to the off-taker Marafiq is guaranteed in a 20- year power and water purchase agreement.
Total project cost is estimated at $3.4 billion, which will be funded by a mix of debt and equity in the ratio of 82:18. The contract will generate a total turnover of $8.5 billion, over 20 years.
The Marafiq project represents around 10 per cent of current total installed capacity in Saudi Arabia of 29,000 MW, which is planned to increase to 60,000 MW by 2020 to meet the kingdom’s rapidly increasing energy demand.
The Marafiq IWPP will also be a substantial contributor to the country’s water supply when it comes online in July 2009.
Dirk Beeuwsaert, CEO of Suez Energy International, said: “The SEI team’s technically innovative approach proved to be an important factor in Suez’s success and differentiates us from competition in the region.
“This huge project contains organisational, technological, financial and commercial features that result in a tariff giving considerable value to the off-taker Marafiq.
“Winning this contract strengthens our reputation as a successful developer in the region. The group is now the leading private developer in the Middle East, managing 8,200 MW of installed power capacity.”
Suez Energy International’s activities and investments in the Gulf region started in 1994 with the development of the first IPP in the Gulf region, the Al Manah project in Oman.
In Abu Dhabi, Suez Energy International is one of the three founding shareholders in Taweelah A1, one of the largest power and water desalination plants in operation in the world.
In 2004, the group won a public tender for both the Sohar IWPP in Oman and the Al Ezzel IPP in Bahrain. Also in Bahrain, Suez completed the acquisition of the Al Hidd IWPP and signed the Barka2 Rusail contract in Oman.
For the contract won by ABB in Qatar, the value was given as $450 million.
The contract included three substations and a telecommunication package for the Qatar General Electricity and Water Corporation (Kahramaa) and was the biggest-ever order for ABB in transmission and distribution.
In November 2005, ABB had won a $170 million contract from Kahramaa for 12 substations and power cables and a $220 million contract for the so-called Gulf grid project which links the electrical grids of six Gulf states including Qatar.
