Power & Water developer profile: Acwa

02 October 2008

Acwa Power’s continued presence near the top of the private power league table can in part be attributed to the company’s sheer ambition.

From the outset in 2004, the Saudi firm has sought to be an active local developer, swiftly bringing on board experienced individuals so that it can stand alongside its international co-developers and not be demoted to the rank of passive local partner.

“If there has been one single factor that has helped us win these projects, it is that we have been a very active participant from day one and not a passive local partner that has just provided office space and some secretarial and driver support services,” says Paddy Padmanathan, president and CEO of Acwa Power.

Key facts

Ranking: 5

Headquarters: Saudi Arabia

Regional head: Paddy Padmanathan

Equity power capacity (GCC): 1,253MW

“We have actively participated through contributing on the technical side, in understanding clients’ real needs and participating in structuring the EPC solution.

We have helped the EPC contractors get better local pricing and have had a lot of input in local and regional financing.”

The company follows a set methodology when it comes to selecting partners for a project: it first selects the optimum technical configuration, taking into account the location, fuel type and capacity requirements of the project, before choosing the most appropriate equipment supplier and EPC contractor mix, and deciding how to structure the financing. Only then does the company select its development partner.

“We look for a partner who can support us with that pre-selected EPC and equipment supply solution and financing,” says Padmanathan. “In our model, selecting a co-developer is the last thing we do.

“Since we started to win projects and pick up some experience, we have become a partner of choice.”

The company hopes to replicate its success in Saudi Arabia elsewhere in the region and has submitted bids in Bahrain and the UAE. It is also considering projects in Oman, Jordan and Morocco.

“Our strategy from 2003 was to focus on getting experience in Saudi Arabia by participating in every tender that was available,” says Padmanathan.

“We said that if by 2008 we had won at least two projects in Saudi Arabia, we would then be ready to start looking at other projects outside the country, initially in the GCC and North Africa.”

If it achieves its target of winning a minimum of two developments in this larger market by 2011, Acwa Power plans to start bidding on projects in Asia - particularly China, India, Indonesia and Vietnam.

In these overseas ventures, the company will seek a strong local partner with a similar ethos to its own that can provide access to local supply chains as well as first-hand knowledge of the market.

But Acwa Power is not just chasing greenfield developments; the company is also interested in portfolio acquisitions of existing assets anywhere in the world, particularly those that come with a human resource capacity.

The company has recently been restructured and now forms part of Acwa Power International, which has $1bn in paid-up capital.

The firm remains committed to a stock market flotation by 2010 and is in the process of setting up an office in Dubai to facilitate closer ties with project partners. Its headquarters will remain in Riyadh.

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