A bid by a consortium of Abu Dhabi National Energy Company (Taqa) and Qatar Electricity and Water Company (QEWC) had been the lowest of five bids for the 1,700MW scheme, but appears to have been unable to convince SEC that it could deliver on its bid.
SEC selected Acwa Power on 13 January. Rabigh 2 is expected to cost around $2.5bn to develop, of which almost $2bn will be debt, mostly from local banks lending in Saudi riyals. Acwa Power’s bid was fully underwritten by the local Banque Saudi Fransi and National Commercial Bank, and the UK’s Standard Chartered. The three banks will now start approaching other lenders to join the financing group.
Acwa plans to put in place 26-year financing for the Rabigh 2 plant, thought to be the longest tenor on a project financing ever in Saudi Arabia, and slightly longer than the 25-year power purchase agreement (PPA) that SEC plans to sign.
When SEC opened the bids on 22 October, the Taqa/QEWC bid was almost 20 per cent lower than second ranked bidder Acwa Power, sparking a wave of rumours about how they managed to secure such a low price and whether the bid was compliant. The Abu Dhabi and Qatari bid was never deemed non-compliant, but sources close to the SEC say it lost patience waiting for the pair to demonstrate they could deliver the project at the same price as their bid.
“TAQA and its consortium were confident that they could deliver the project as originally bid. When the SEC requested a new bid based on a lower capacity power plant at the same tariff, this required a full redesign of the plant and we viewed the short timeframe for the new bid as unrealistic,” said Taqa in a statement, adding that it remained committed to the Saudi Market.
Acwa Power is also planning to launch its first sukuk (Islamic bond) later this year.
On 13 January, two Saudi government-owned funds took an equity stake totalling almost 20 per cent in Acwa Power.