Consortiums begin to form for Rabigh power project

25 July 2008
Ability of companies to secure resources for the scheme remains in doubt.

Developers are starting to form consortiums for Saudi Electricity Company’s (SEC) 1,200MW independent power project (IPP) at Rabigh, but uncertainty remains over their ability to secure engineering, procurement and construction (EPC) resources.

At least five groups are being formed by 13 of the 23 companies originally prequalified for the project. Other potential bidders are seeking partners.

Japan’s Sojitz initially attempted to form a consortium with Malaysia’s Malakoff Corporation. However, according to sources close to the project, Malakoff is unlikely to bid and will focus instead on bidding for the Water & Electricity Company’s independent water and power project at Ras al-Zour.

Sojitz has now joined Malaysia’s Powertek Berhad and the local Xenel Industries in a consortium.

Many of the developer groups are already in discussions with contractors. But the tight schedule on SEC’s first IPP could make it difficult to get them on board.

The successful bidder will have 37 months from financial close to bring the first power on line. “The developer groups are concerned,” says one project source. “The delivery schedule is too tight.”

The timetable for the IPP does not compare favourably with those on SEC’s other EPC schemes.

A project to expand the existing Rabigh power plant, which is out to bid, gives contractors 44 months to bring the scheme into commercial operation (MEED 23:7:08).

“In parallel to the IPP programme, SEC is running an EPC programme,” says the project source.

“The delivery schedule for Rabigh phase 6 is much more relaxed. The fact is that the delivery schedule for the IPP is much shorter than for the EPC programme. Some developers are doubting how serious SEC is about this project.”

Others agree that the timetable is not ideal, but say that there may be room for manoeuvre.

“Thirty-seven months is not a good schedule but the demand for electricity in Saudi Arabia is really tough,” says Fareed Alyagout, president of National Power Company. “SEC will push for 37 [months], but I think this will be adjusted.”

One developer tells MEED the schedule is not a problem. “There is no reason why a bid of this type - power only - cannot be done in four months,” he says.

The client is confident that the shorter timeframe will not affect the number of bids for the project.

“There are at least four reasonably serious consortiums with the intention to bid,” says Bill Appleby, director of infrastructure and energy finance at Citi, financial adviser on the scheme.

SEC prequalified 23 firms and groups for the project in March. Of those, 13 were prequalified on the condition that they form consortiums with the other 10 companies before they bid.

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