Abu Dhabi Water & Electricity Authority (Adwea) has selected a partnership of Japan’s Sumitomo Corporation and Korean Electric Power Company (Kepco) as first-ranked bidder to build the Shuweihat 3 independent power project (IPP).

According to a source close to the deal, negotiations will commence with the first-ranked bidders immediately with a view to signing the power purchase agreement (PPA) for the project by mid-December 2010.

Sumitomo and Kepco offered a bid of 473.1MW in early power capacity and 1,600MW at full capacity with a price of 10.866 fils/kWh (5-year tariff) and 12.865 fils/kWh (20 years) in the first scenario.

The first ranked bidders have financial backing from France’s BNP Paribas and Japan’s Mizuho for their bid. The group is understood to be collaborating with South Korea’s Daewoo Engineering & Construction and Germany’s Siemens for the engineering, procurement and construction (EPC) work.

Offers were priced for the first five years of the project, with another figure for 20 years covering the full term of the construction, operation and maintenance period. A 15-year power purchase agreement (PPA) is included as part of the scheme.

The Japanese-Korean partnership has been selected over the following bids:

  • Marubeni/Kansai/Osaka Gas (all from Japan): 436.8MW early power capacity and 1,600MW full capacity – 11.13027 fils/kWh (5 years) and 13.05818 fils/kWh (20 years)
  • International Power (UK)/ Tokyo Electric Power Company (Japan): 432MW early power capacity and 1,544MW full capacity – 11.406 fils/kWh (5 years) and 13.437 fils/kWh (20 years)
  • Mitsui & Co (Japan): 547.8MW early power capacity and 1,600MW full capacity – 11.618 fils/kWh (5 years) and 13.717 fils/kWh (20 years)
  • GDF Suez (France): 445MW early power capacity and 1,600MW full capacity – 11.9126 fils/kWh (5 years) and 13.9958 fils/kWh (20 years)

The bids were priced under the assumption that operations and maintenance (O&M) work is performed by a third party. This structure has been used for previous independent water and power projects (IWPPs) in Abu Dhabi.

Bidders were also asked to submit an alternative bid, including the O&M work, that would be considered if the first bids were too similar in price. Adwea made the award based on the bids excluding the O&M work.

Sumitomo and Kepco submitted an alternative bid along with two other bidding groups:

  • International Power (UK)/ Tokyo Electric Power Company (Japan): 432MW early power capacity and 1,544MW full capacity – 11.439 fils/kWh (5 years) and 13.486 fils/kWh (20 years)
  • Sumitomo Corporation (Japan)/Korean Electric Power Company (South Korea): 473.1MW early power capacity and 1,600MW full capacity – 11.021 fils/kWh (5 years) and 13.072 fils/kWh (20 years)
  • Marubeni/Kansai/Osaka Gas (all from Japan): 436.8MW early power capacity and 1,600MW full capacity – 11.13027 fils/kWh (5 years) and 13.05818 fils/kWh (20 years)

International Power and Tokyo Electric Power Company’s bid was backed by Germany’s BayernLB and Japan’s Sumitomo Mitsui Banking Corporation. The partnership was working with Japan’s Toshiba as the EPC contractor.

The Marubeni-led bid secured financial backing from France’s Credit Agricole and the UK’s Standard Chartered. South Korea’s Hyundai Engineering & Construction was selected by the bidding group for EPC work.

Mitsui’s bid was backed by France’s Societe Generale and Bank of Tokyo Mitsubishi (BTMU). Japan-based Mitsubishi Heavy Industries was the EPC contractor.

France’s GDF Suez has teamed up with Saudi Arabia’s Samba and France’s Natixis.

Adwea prequalified 15 firms to bid for the development of the project. It plans to bring Shuweihat 3 online in mid-2013, with a successful developer holding 40 per cent of the equity in the project and Adwea holding the remaining 60 per cent.

Shuweihat S3 will be Adwea’s first IPP, as all its previous projects have included a water desalination unit. According to industry sources, the project will be switched off during the winter months once Abu Dhabi’s nuclear project is online. The first power from Abu Dhabi’s nuclear scheme is due to be delivered from 2017. The shutdown is to occur when there is potential for savings on O&M. The project company would receive additional payments from the shutdown and restart.