Abu Dhabi to develop Shuweihat 3 power project ahead of Taweelah C

14 January 2010

Scheme will be Adwea’s first independent power project

Abu Dhabi Water & Electricity Authority (Adwea) is planning to issue a request for proposals for an independent power project (IPP) at Shuweihat in the first quarter of the year, sources close to the scheme tell MEED.

The plan means that the Shuweihat 3 IPP will be developed ahead of the Taweelah C independent water and power project (IWPP), which until now was expected to be Adwea’s next scheme.

The Shuweihat 3 project is expected to have a capacity of 1,500MW and will be Adwea’s first ever IPP. The absence of a desalination component should make the project both quicker to build and easier to finance.

Taweelah C would have had a capacity of 2,400-2,600MW of power and 55-66 million gallons a day of desalinated water.

“Taweelah C could require up to $4bn of debt, and the market for finance is still pretty constrained,” says one banker close to Adwea. “Getting a preferred bidder and funding in place to develop a project of the scale of Taweelah C is unlikely to occur until early 2011, so it makes sense to develop Shuweihat 3 first.”

According to other sources close to the project, Adwea’s decision to go ahead with an IPP rather than an IWPP at Shuweihat was also driven by the lack of sufficient capacity for water transmission from the site.

The move is also related to the difficulties Adwea had in trying to secure a gas feedstock for Taweelah C. As a result of those issues, the utility had been considering building the IWPP as an oil-fired plant.

However, Adwea now appears to have come to an agreement with Abu Dhabi National Oil Company (Adnoc) and its subsidiary, Abu Dhabi Oil Refining Company (Takreer), over a supply of fuel for the new plant. As part of the deal, Takreer has also scrapped plans for a planned third phase expansion of its power plant at Ruwais and will instead import electricity from Adwea’s network, according to sources close to the scheme.

Takreer’s own project would have added 750MW of new capacity at Ruwais, which lies 30 kilometres east of Shuweihat.

Without the deal with Takreer, and with the continued moratorium on further development of Qatar’s North field and delays on the development of the UAE’s Shah gas field, new gas supplies might not have been available to Adwea until 2013 or 2014.

Adwea’s last project, the $3.2bn Shuweihat 2 IWPP was hit by several financing problems as a result of the global financial crisis. In October 2008 the banks underwriting Suez Energy International’s bid to develop the project withdrew their commitments, forcing the developer to seek short term funding to start construction. It was only in October 2009 that Suez, together with its new partner Japan’s Marubeni Corporation, put long term funding in place.

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