The award of the $3.2bn contract to South Korea’s Hyundai Heavy Industries (HHI) is the largest contract awarded in the GCC’s power market in 2012 and boosts a sector which had recorded a slowdown in activity for the first three quarters of the year.
The $6.3bn worth of power construction contracts awarded in the first three quarters of this year was down 53 per cent on the $13.3bn awarded for the same period in 2011. The $1.5bn worth of power deals awarded in the third quarter was almost a 70 per cent drop on the second quarter contract awards.
Saudi Arabia continues to dominate the GCC’s power construction sector, with the $4.1bn worth of deals awarded in the first three quarters of the year, 63 per cent more than the $1.5bn awarded in Kuwait, the second most active GCC market in the period.
The award of the $3.2bn contract for the Jeddah South project brings the total power contract awards to over $7.3bn in 2012 to date. Prior to the Jeddah deal, the largest contract award this year was the estimated $1.3bn contract awarded to the local Arabian Bemco to build the PP12 (power plant 12) near Riyadh.
Saudi Arabia is set to continue to offer a number of opportunities in the power sector, with $60bn worth of power projects in various stages of the planning and bidding stages.
Contractors are still waiting for a decision on the award of the estimated $1.8bn power plant for the third phase of Saudi Arabia’s Saline Water Conversion Corporation’s (SWCC)’s Yanbu power project. Bids for the project were submitted in July, but due to some issues regarding submissions, there has been no indication of when the contract will be awarded.
Contractors are currently working on submissions for the Rabigh 2 independent power project (IPP), which is planned as a 1,700MW supercritical plant that will use heavy fuel oil (HFO).
Following the general trend across the GCC, the value of power contract awards in Kuwait for the first three quarters is down year-on-year. The value of contracts awarded for the first nine months in 2012 is down 32 per cent compared to the same period in 2011.
However, the country’s power sector is showing signs of picking up, with the $789m of third quarter contracts up 55 per cent on the $352 in the second quarter. The biggest power construction award in Kuwait in 2012 is the $381m contract awarded for an elevated substation for the Kuwait Oil Company (KOC).
Qatar was the third most active power market for the first three quarters, with an estimated $354m worth of contracts awarded. The highest value contract was an estimated $192m deal to build a high voltage substation for the Qatar General Electricity and Water Corporation (Kahramaa).
There was $230m worth of power contracts awarded in the UAE for the first three quarters. However, the country’s power sector has been boosted early in the fourth quarter with $562 maintenance contract awarded to Germany’s Siemens by the Dubai Electricity and Water Authority (Dewa) to maintain a power and desalination plant at Jebel Ali.