Baghdad revises tender schedule for independent power projects

06 January 2011

Bid deadlines extended by one month

Iraq’s Electricity Ministry has extended the deadlines for bids to build four independent power projects (IPPs) by about a month for each plant.

The deadline for bids to construct the Samawa IPP in Muthana governate, which will comprise four 125MW turbines, has been pushed back from 23 January to 22 February.

The deadline for Diwaniya IPP (Qadisiyah governate) bids has been moved from 20 January to 21 February. Four 125MW turbines will be built at the site.

The deadline for bids to build the Shat al-Basrah IPP in Basra governate, which will comprise 10 turbines of 125MW each, has been moved from 16 January to 15 February.

Developers now have until 16 February, as opposed to 18 January, to respond to the request for proposals (RFP) to build the Amara IPP in Maysan governate. The project will comprise four turbines and will have a capacity of 500MW.

The ministry and its advisers originally intended 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. This schedule is likely to be pushed back as a result of the delay.

The January deadlines were widely criticised as overly ambitious. The ministry has cited requests from prospective bidders as the reason behind the extension.

The new plants will add a total of 2,750MW in additional electricity generation capacity. They will be awarded four 25-year build-own-operate (BOO) contracts to develop the gas-fired plants, which will use Frame 9E gas turbines supplied by the US’ GE.

Payments to developers will be based on both the availability of power facilities and the amount of power produced by the projects. Payments will be guaranteed by letters of credit.

The selected developers will be responsible for securing gas feedstock for the projects. This will be reviewed in four years’ time.

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. The government has indicated that contract commitments will take precedence should they be signed before an electricity law, currently being debated in parliament, is passed.

Eight or nine companies are set to submit bids to develop the projects, according to one of the government’s advisers. However, these companies may or may not be sufficiently qualified to carry out the work. In an effort to speed up the IPP programme, the government opted to issue an RFP without a qualification stage.

Bids will be evaluated in two stages. The first stage will assess technical capabilities and the second will consider financial aspects. Bids will be assessed on the following basis:

  • 35 per cent – tariff
  • 25 per cent – financial strength
  • 25 per cent – experience developing, establishing and starting up of the project
  • 15 per cent – detailed plan for developing the project, including the implementation of the project from financial close to completion of construction

Iraq has an urgent need for power as most of the country suffers from crippling daily blackouts for most of the day. The country’s power demand is about double that of its installed generation capacity. Further, demand is growing six times as fast as capacity.

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