It is understood that the VA Tech Hydro/Voith Siemens team was ranked ahead of Alstom following the evaluation of both technical and financial offers. However, sources close to the project say German ECA Hermes decided not to provide guarantees to the consortium - a precondition for all bidders.

The French company, which is facing severe financial problems at home, also received strong support from the government in Paris. France's Coface has since agreed to provide guarantees for Alstom. Four Arab agencies have already committed to provide the bulk of funding for the package.

Two other groups bid for the M&E package - China's Dongfangand a team led by Russia's Technopromexport. The package calls for the construction of the 1,500-MW hydroelectric plant, which will house 10 125-MW hydroelectric turbines, and the provision of equipment.

A letter of acceptance has also been sent out for the project's transmission line package. A Chinese consortium comprising Harbin Power Engineering Company and Jilin Electric Power Companyhas been awarded the estimated $380 million contract.

A consortium, made up of China International Water & Electric Corporationand China National Water Resources & Hydropower Engineering Corporation, signed the Eur 549 million ($631 million) civil works package in June. The package is being financed by the Saudi Development Fund, the Kuwait Fund for Arab Economic Development, the Abu Dhabi Development Fund and the Arab Fund for Economic & Social Development.

The 520-metre-long Merowe dam will be built near the Nile's fourth cataract, some 120 kilometres north of Khartoum. Completion is set for 2008. The engineering consultant is Germany's Lahmeyer International.

www.meed.com/powerwater