The first project to be affected is Station P, being built at Hassyan. Instead of a 23-month timeframe to bring the first turbine on line, the winning bidder will be given 29 months. An even longer extension is planned for Dewa’s Station Q, also at Hassyan. Both stations Q and P have capacity of 3,000MW and 200 million gallons a day of desalinated water.
In August, Dewa will award the contracts for the two-phase construction of the Station P plant. Both phases will include four gas and two steam turbines, and seven desalination units.
The timeframe change is driven by a recognition that contractors and suppliers are struggling to meet demand. “Projects were delayed by two-three months and some by a year,” says a senior Dewa executive.
“We are sure the 23-month deadline is achievable, but most of our projects are finishing in 27 months. Now, contractors will have a two-month buffer.
“If we overrun we lose because we are not making any revenue. We end up buying from Abu Dhabi through the Emirates National Grid, and that costs more than producing our own power.”
Contractors working on Station Q will have 36 months to bring the first gas turbine on line. It will be tendered in April 2008, with an award due in August 2009.
Dewa will still face difficulties in securing gas. In 2007, gas shortages forced it to use fuel oil, a more expensive feedstock. It made a loss of AED223m ($61m) in the seven months to 31 July 2007. Over the same period in 2006, it made a profit of AED423m.
Station P will be gas-fired, using oil as a back-up. “They tell us that we will have adequate gas in 2008 and there will be no fuel oil operation,” says the executive. “But from 2009 onwards, there is talk of a shortage of gas.”
The deadline for bids for the engineering, procurement and construction contract for the first phase of Station P is 31 March, and 15 April for the second phase.