“This includes developing the best technical solutions, the most competitive EPC and financing packages, combined with the ability and experience to operate at a world-class level,” says Richelle.
“These projects are complex and we have to make the best choices with regard to technical options, project configuration, equipment and suppliers.
“The second key factor relates to the funding, financing conditions and structures aimed at reducing the total cost, which assumes a very good knowledge of banking circles and techniques for negotiating the best terms.
Regional head: Guy Richelle
Equity power capacity(GCC): 4,362MW
“The third element is the operation and maintenance once the construction work is completed, and our expertise and past experience are major assets in that respect.”
When it comes to selecting co-development partners, Suez seeks strong allies that add value to a consortium, bringing access to financing, specific technologies or local knowledge. As a result, its partners vary from project to project.
“Local partners are important, especially during the implementation phase, when they can support us with manpower and an understanding of the local regulations,” says Richelle.
At the end of August, Suez was awarded the contract to build, own and operate the $2bn Addur IWPP in Bahrain.
Its partner for this project is Kuwait-based Gulf Investment Corporation. The EPC contractor for the power plant is South Korea’s Hyundai Heavy Industries, and US firm GE is supplying the gas turbines for the 1,234MW facility.
As one of the most active private power developers in the Middle East, Suez is beginning to run up against limitations on market share in Oman, where foreign entities are not permitted to hold more than 25 per cent of the country’s generating capacity, and likewise in Bahrain.
But the company says significant growth opportunities remain in Saudi Arabia, the UAE and the wider Middle East, so it plans to continue bidding for IPPs and IWPPs.
The shortage of EPC contractors and rising costs are the biggest issues the power industry faces, but Richelle dismisses fears that the global economic downturn could also start to hurt the sector.
“Strong projects with strong partners should continue to attract financing,” he says. “The terms of such financing are, however, not as attractive as they once were.”
Certainly, turmoil in the financial markets did nothing to dampen enthusiasm for the July initial public offering (IPO) of a 35 per cent shareholding in the Sohar Power Company, which developed the Sohar IWPP in Oman and is majority owned by Suez. The IPO was 21 times oversubscribed.
“The success of the IPO illustrates the confidence of the Omani public and the larger investor community for well-structured and profitable projects promoted by Suez Energy International in association with its local partners,” said Dirk Beeuwsaert, CEO of Suez, after the launch.