Abu Dhabi Water & Electricity Authority (Adwea) is exclusively inviting Japan’s Marubeni Corporation to develop the planned Shuweihat 3 independent water and power project (IWPP) for the same price as a previous plant awarded in May.
Adwea is making the move in a bid to insulate itself from future cost rises and to push the development of the plant as quickly as possible to meet rising power demand. It is a tactic it has tried before, but not successfully.
Marubeni has been asked to match the winning price submitted by Belgium’s Suez Energy International for the Shuweihat 2 project. Marubeni was the second-ranked bidder for that project (MEED 15:5:08).
The Japanese company is understood to have responded with a project proposal, which Adwea is evaluating.
According to industry sources, Marubeni has in turn approached Suez’s Shuweihat 2-nominated contracting consortium of Samsung Engineering, Doosan Heavy Industries & Construction, both of South Korea, and Germany’s Siemens to participate on the Shuweihat 3 project. Marubeni declined to comment.
The Japanese company had teamed up with Spain’s Iberdrola Ingenieria y Construccion, Japan’s Hitachi Zosen and the US’ GE on its bid for Shuweihat 2.
If Marubeni’s proposal for Shuweihat 3 is successful, Adwea will enter into direct negotiations with the company for the 1,600MW, 100 million gallon-a-day project.
If it fails to meet the utility firm’s expectations, however, it is likely that the scheme will be offered to developers on an open tender basis.
Adwea has tried and failed with a similar tactic before. In late 2007, it invited two developer groups to submit proposals for Shuweihat 2.
It approached the two highest-ranked bidders for the previous Fujairah 2 project and asked them to agree to the same pricing for the Shuweihat 2 plant.
However, neither bidder – the UK’s International Power with Japan’s Marubeni Corporation, or Belgium’s Suez Energy International – submitted offers to Adwea, forcing it to revert to its original plan of competitively tendering the project (MEED 16:11:07).
The IP/Marubeni team won the Fujairah contract with an electricity tariff of AED0.107 a kilowatt hour (kWh) and a desalination cost of AED13.404 a thousand gallons, far lower than the costs that Adwea ultimately agreed for the Shuweihat 2 plant.
With costs rising fast across the industry, any new scheme is likely to cost even more.
In the past, Adwea has waited until one IWPP reached financial close before it tendered its next project. On Shuweihat 2 and 3, it invited developers to submit offers immediately after the first project was awarded.
It is unclear whether Marubeni will be able to match Suez’s price. If it does, it will put Adwea in a position to bring on new power-generating capacity faster.
With materials and engineering, procurement and construction costs escalating, it is in Adwea’s interests to receive a price soon.