Kuwait’s Partnerships Technical Bureau (PTB) has selected UK/French company IP-GDF Suez, Japan’s Sumitomo and Kuwait’s AH Sagar & Brothers Group as preferred bidder to build an independent water and power project (IWPP) at Al-Zour North. The group 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 KD127.077m.

The second-lowest bid, which was entered by Japan’s Marubeni and Kuwait’s Alghanim, has been named second-ranked bidder. The group submitted an AEP bid of KD132.509m. Malaysia’s Malakoff International, South Korea’s SK Group and the local National Industries Group also submitted a bid of KD171.770m.

Five groups responded to the request for proposals (RFP), but only three financial bids were opened in early February. The financial envelope for a bid submitted by Japan’s Mitsui, Kuwait’s Kharafi Group and Kuwait’s Ahmadiah was not read out at the bid opening.

“In the opening session, the Mitsui group was not compliant with the financial [requirements of the RFP]. There were two items that were clearly identified in the RFP and were required in hard copy for the bid opening ceremony. They needed two numbers – the AEP and the share price…These numbers were not submitted in the opening session,” says Adel Al-Roumi, director general of the PTB.

“It really is important to apply the RFP to these projects,” says Al-Roumi. “It is very price sensitive. If you become lenient … it will affect the prices. So we wanted to be fair and transparent to all.”

Nevertheless, the decision has been met with some criticism and claims that the Mitsui-led bid was cheaper than the IP-GDF Suez/Sumitomo bid.

Another bidding group was disqualified ahead of the commercial bid opening (MEED 2:2:12). A bid submitted by Acwa Power, Kuwait’s GIC and South Korea’s Samsung C&T was rejected following a technical evaluation. “In the end it came down to the final submissions. In the opinion of the tendering committee and our technical adviser, it was not compliant with the RFP,” says Al-Roumi.

The winning developer group will design, finance, build, operate and maintain the plant, which will have a capacity of 1,500MW of power and 102-107 million gallons a day (g/d) of desalinated water. The project is required to successfully achieve early power of at least 200MW by no later than 31 December 2013. At least 400MW is to come online no later than 15 February 2014 and 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 fuel and gas oil as back-up fuel. Gas and gas oil will be provided by the Electricity and 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.

Each of the bidders was required to submit share prices as part of their proposals. The following values were submitted:

  • Sumitomo/IP-GDF Suez bid: KD38.964
  • Marubeni bid: KD131.669
  • Malakoff International bid: KD81.722

Kuwait has adopted the IWPP model for all its future power and water schemes over 500MW and is already planning four more projects at the Al-Zour North site. Phase two is to have the same capacity in power and water as phase one. Phase three will add 800MW in power capacity and 50 million g/d, phase four will add 1,000MW and phase five will add 25 million g/d of water capacity to the site. Phases one and two are expected to be fired on natural gas with gas oil as a back-up fuel.

The PTB is advised by France’s BNP Paribas, US law firm Chadbourne & Parke and Germany’s Lahmeyer International.