The Dubai Electricity & Water Authority(Dewa) has selected the consortium of Saudi Arabia’s Acwa Power and China’s Harbin as the preferred bidder for the 1,200MW Hassyan coal-fired independent power project (IPP).

Dewa announced the selection of the Acwa group on 13 October.

The Acwa/Harbin consortium was selected as the preferred bidder with a levelised cost of energy tariff (LCOE) of 4.501$cents a kilowatt hour.

The consortium had originally submitted the lowest bid of 5.177 $cents a kilowatt hour for the 1,200MW facility when bids were opened on 30 April, but the consortium was able to further reduce its tariff when dewa invited it and the second lowest bidder, led by South Korea’s Kepco, were invited to submit fresh bids.

“Acwa and Kepco were asked to resubmit prices,” Saeed Mohammed al-Tayer, managing director and CEO of Dewa, told MEED at the event to mark the selection of the preferred bidder. “Kepco didn’t lower tariff but Acwa lowered price.”

“After a very competitive bidding process, we feel we were able to get the most competitive price,” David Lloyd, Middle East transaction advisory services power and utilities leader, EY told MEED. EY is the financial adviser for the project.

The selected consortium will develop the IPP under a build-own-operate (BOO) operate model, and will sign a 25-year power purchase agreement (PPA) agreement with Dewa.

China’s Harbin will build the plant in partnership with France’s Alstom. The French power firm will lead the engineering, procurement and construction (EPC) consortium, and will be in charge of the overall engineering of the plant. Netherland’s based Louis Dreyfus will build the coal handling facilities and France’s EDF will supply coal for the plant.

Al-Tayer said that the 1,200MW plant will be delivered in two phases, with the first 600MW coming online in March 2020 and the remaining 600MW to be commissioned in March 2021.

The Dewa head said the utility will hold a 51 per cent share in the project company, and that the total cost of the coal project will be $1.8bn.

About 78 per cent of the financing will be funded through debt with the remaining 22 per cent through equity. Dewa will fund 51 per cent of the equity, which will equate to about $200m, Al-Tayer told the audience for the ceremony to select the preferred bidder.

Al-Tayer said that Dewa is planning to develop 3,600MW of coal-fired generation capacity over three phases. The projects are part of the utility’s aims to meet the emirate’s target for coal to contribute to 7 per cent of the total power supply by 2030.