Kuwait awards contract for Al-Zour North power project

08 January 2013

The GDF Suez-led consortium will build Kuwait’s first independent power and water project

Kuwait’s Partnerships Technical Bureau (PTB) has awarded the consortium of UK/French company GDF Suez, Japan’s Sumitomo and Kuwait’s AH Sagar & Brothers Group the contract to build the Al-Zour North independent water and power project (IWPP).

The GDF Suez-led consortium confirmed on 8 January that it had been awarded the contract to build Kuwait’s first IWPP. The PTB selected the winning consortium as the preferred bidder in February last year, but the project stalled when Kuwait’s National Assembly voted to scrap the scheme in June.

The successful consortium had submitted the lowest bid to build the project with an annual equivalent payment (AEP) value – the yearly payment to the developer over the lifetime of the project – of KD127.1m ($453m).

The winning group will design, finance, build, operate and maintain the plant, which will have a power capacity of 1,500MW and 102-107 million gallons a day (g/d) of desalinated water. At least 400MW of power is planned come online no later than 15 February 2014, with at least 600MW by 31 March 2014. The project is to enter commercial operation by 31 May 2015.

The project will use natural gas as its main feedstock and gas oil as back-up fuel. Gas and gas oil will be provided by the Electricity & Water Ministry. The desalination plant will use either a 100 per cent thermal process or a hybrid process. In the case of a hybrid solution, the capacity of the reverse osmosis plant is not to exceed 25 per cent of the total desalination capacity.

A special-purpose vehicle will be established as a Kuwaiti public joint stock company, with 40 per cent owned by the successful bidder. The remainder will be held by a combination of Kuwaiti public entities directly and Kuwaiti nationals.

The Al-Zour North IWPP has long been viewed by those in Kuwait’s projects and finance sectors as a key project for Kuwait’s ambitious PPP programme. As the PTB’s first project, it is regarded as a catalyst for the rest of the country’s planned schemes, which require private investment.

Other PTB schemes currently under discussion include the Kuwait Metro and the Umm al-Hayman wastewater project.

For the metro, the PTB is preparing to issue a request for qualification (RFQ) for the rolling stock and systems package in the first half of 2013. The rolling stock package is the first to be tendered on the 61-kilometre-long first phase of the Kuwait metro, with construction scheduled to begin in early 2014. The metro network is being built in five phases until 2035 and will be 170km long when completed.

In September last year, the PTB prequalified six groups to bid for the contract to build the Umm al-Hayman wastewater public-private partnership (PPP) project. The Umm al-Hayman scheme will increase the capacity of the southern region of Kuwait for dealing with waste by 20 times, compared with current capabilities. The plant will have an initial capacity of 500,000 cubic metres a day (cm/d), which is planned to increase to 700,000 cm/d by 2020.

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