Private sector prepares power-plant bids as Iraq completes strategic master plan
Iraq’s Electricity Ministry plans to overcome the current shortfall in power generation capacity with comprehensive 20-year masterplan that includes an independent power project (IPP) programme and engineering, procurement and construction (EPC) schemes.
The Energy Ministry and its advisers intend to conclude bid evaluations by March 2011
Iraq’s current demand for electricity is roughly double that of installed capacity and this gap is widening. Demand is growing six times as fast as capacity. Industry takes priority for electricity access which leaves the population with few hours of electricity every day.
The government commissioned the US’ Parsons Brinckerhoff to conduct a study and devise a master plan for the country’s electricity sector until 2030. The report is now complete and covers power generation capacity building, transmission and distribution.
According to the study, by 2030 power demand in Iraq will total 46GW in a high-end scenario, about 32GW in a base case and roughly 22GW in a low-end scenario. About $29bn of investment will be necessary between 2015 and 2030. Of this about $21.13bn is intended to be funded by international private investors.
Central to the government’s plan to mobilise the private sector is its IPP programme. The Energy Ministry has invited bids from power developers to build, finance and operate four new power plants across the country to provide 2,750MW of additional electricity generation capacity. Baghdad is offering four 25-year build-own-operate contracts to develop the gas-fired plants, which will use Frame 9E gas turbines supplied by the US’ GE.
The Energy Ministry and its advisers intend to conclude bid evaluations by March 2011, carry out negotiations with the bidders in April and May and reach financial close between July and September 2011.
The ambitious tender schedule has concerned many potential bidders. Also, the selected developers will be responsible for securing gas feedstock for the projects, which has acted as a further deterrent to international developers. Developers will also need to negotiate project-specific power purchase agreements (PPAs) and in the absence of relevant legislation, regulation will be by contract model.
Eight or nine companies are set to submit bids to develop the projects. However, these companies may or may not be sufficiently qualified to carry out the work. In a bid to speed up the IPP programme, the government opted to issue an RFP without a qualification stage.
Iraq’s IPP plan has evolved many times since its launch. The original scheme comprised eight projects. In July 2010, a bidders’ conference for developers was converted to a workshop and the eight IPPs were reduced to five projects. This was then reduced again in September to four projects.
Iraq is also signing several EPC contracts for new power plants across the country. The ministry recently signed such a contract for a 1,250MW power plant at Al-Khayrat. Turkey’s Calik Enerji has been selected to construct the natural gas-fired project at Al-Khyrat located in Karbala province. The power plant will comprise 10 GE turbines of 125MW capacity each.
An EPC contract for a 500MW power project at Qudas in Baghdad province is expected to be signed soon. Calik Enerji and another Turkish company Eastern Lights Energy are competing for the contract. The Qudas project will comprise four 125MW turbines.
Germany’s Siemens is expected to sign EPC agreements with the ministry to build a 1,300MW project at Al-Roumila in Basra province.
Due to the current heavy focus on simple cycle gas turbine generators as a result of the turbine megadeals signed with GE and Siemens in 2009, Iraq’s master plan states that the next phase of projects should be exclusively combined cycle projects. After 2024, the master plan states that a combination of projects should be developed.
In the 2015-2030 period, the master plan recommends the development of 10x simple cycle gas turbines, 29x 600MW combined cycle turbines, 28x 282MW combined cycle turbines, 2x 600MW combined cycle turbines and 6x 355MW combined cycle conversion. Finally, a 27MW hydropower project is planned at Adhaim.
Currently, only 26 per cent of electricity generation uses natural gas. According to the master plan, Iraq should adjust its energy mix to include more gas-fired generation. To achieve this, the master plan asserts that Iraq should run some of its existing crude-oil fired power projects on other fuels.
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