Power & Water developer profile: Marubeni Corporation

02 October 2008

Marubeni Corporation has drawn up a $6bn spending plan for the next two years, $3bn of which has been ringfenced for investment in its oil and gas, mining and IPP businesses. It is this strength of financial commitment that gives the Japanese company a competitive edge in winning tenders in the Gulf, says Hiroshi Toyoshima, president of Marubeni Europower.

“As the company is supporting our IPP acti-vity, we have plenty of cash flow available, so we can take a reasonably aggressive approach and take a larger stake in the projects,” he says.

“Some companies try to participate in the projects as an investor that is just bringing finance from Japan, but that does not make the project competitive.”

Key facts

  • Ranking: 3

  • Headquarters: Japan

  • Regional head: Hiroshi Toyoshima

  • Equity power capacity (GCC): 1,944MW

By playing a leading role in developments, Marubeni says it is able to increase efficiency across the whole project, rather than just focusing on one small area.

Toyoshima considers the crucial elements of a successful bid to be finding a competitive EPC contractor, negotiating a favourable contact with the contractor and arranging good project financing.

The company aims to increase its net equity power portfolio by 50 per cent by the end of 2009, adding about 4,000MW of capacity.

The investments will be distributed equally across the Americas, Southeast Asia and the Middle East to balance any risk.

With its ready access to Japanese government finance, Toyoshima does not envisage any problems in accessing funding for projects but, as for all developers, securing EPC contractors will be a challenge.

As an experienced EPC contractor, Toyoshima says Marubeni uses its in-house market knowledge and experience to negotiate work-able solutions and good relationships, teaming up with established contractors and newcomers alike.

When it comes to selecting co-developers, it always looks to partner with experienced international outfits and a local firm that knows the market well.

Price inflation

In July, having lost out to Suez on the tender to build the Shuweihat 2 IWPP in the UAE, Marubeni was exclusively invited to build the Shuweihat 3 IWPP for the same price as that tabled by Suez.

The company has submitted a proposal for the 1,600MW, 100 million gallon-a-day project, which is being evaluated.

Abu Dhabi Water & Electricity Authority made this offer in a bid to insulate itself from price inflation and to push the development of the plant as quickly as possible to meet rapidly rising power demand.

It is a tactic it has tried before, but not successfully. Should it work this time, Toyoshima expects other utility providers to follow suit and circumvent lengthy tendering procedures.

“With the increase in materials and local labour costs, if the offtaker waits it will lose money, so sometimes it will have to take the fast-track approach,” he says.

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