Local company Acwa Power has signed the power purchase agreement (PPA) with the Saudi Electricity Company (SEC) to develop the $1.6bn Rabigh 2 independent power project (IPP).

The Acwa Power consortium had been selected as the preferred bidder for the 2,060MW IPP in January, and signed the PPA with SEC on 30 November. The PPA has created the Al-Mourjan for Electricity Production Company to operate the Rabigh 2 plant, with SEC and the winning consortium holding a share of 50 per cent each.

As part of the Acwa consortium, South Korea’s Samsung C&T has been awarded the engineering, procurement and construction (EPC) contract to build the power plant. The combined-cycle, gas-fired plant will be located in Rabigh on the western coast of Saudi Arabia, 150 kilometres north of Jeddah.

The signing of the PPA marks the end of a protracted tender and negotiation period for the power project, following the selection of Acwa as preferred bidder at the beginning of the year. In April, SEC announced it was changing the configuration of the Rabigh 2 plant from oil to gas, as a result of state oil company Saudi Aramco’s plans to limit the supply of oil to future domestic power plants.

Following the decision to change the configuration of the plant, SEC had initially planned to retender the Rabigh 2 IPP. However, the state utility subsequently decided to scrap the rebid and continue negotiations with Acwa Power to develop the project as a gas-fired plant.

The Rabigh 2 IPP will form part of the kingdom’s efforts to boost generating capacity in the coming years to cope with the expected rise in demand. In its 2012 annual report, SEC forecasts that peak demand will grow from the 51,900MW recorded in 2012 to 85,000MW in 2020 and 120,000MW by 2030.

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