Saudi Electricity Company (SEC) is reviewing its decision to change the primary fuel for the planned Qurayyah independent power project (IPP) from heavy fuel oil to natural gas. Sources at SEC have indicated that the project could now go back to its original form as an oil-fired project.

The 1,800MW scheme was launched as an oil-fired facility with expressions of interest invited in May 2010. A total of 39 companies responded at this stage. In June, SEC issued a request for qualification (RFQ) which drew 16 responses (MEED 24:6:10).

By August, SEC had taken the decision to change the fuel for the project to natural gas. A revised request for qualification (RFQ) was issued as a result. Companies that responded to the first RFQ were asked to resubmit their documents, while developers that missed the first round could enter expressions of interest for the gas-fired project by 11 August.

In a sign that further delays are likely for the project, SEC is now considering changing the fuel back to oil. “It is possible that it could go back to oil-fired, definitely. We hope to have a final decision very soon,” says a source at SEC. While progressing with the tender, SEC reviewed the project specifications. “We realised that it is very difficult to get the fuel to the site from the sea, so we started considering different alternatives,” the source adds.

The discussions regarding the proposed fuel for the Qurayyah project have already delayed the initial project timetable. SEC had planned to evaluate RFQ submissions, compile a list of prequalified companies and issue a request for proposals (RFP) in August this year.

The fuel debate has also hinted at an internal struggle within the government. Since 2006, the government has attempted to develop new power-generation facilities using oil-fired plants in order to free up more of its natural gas resources for export.

Saudi Arabia has since appeared to back away from this policy, starting with the power and water project at Ras al-Zour, which is now gas-fired. The announcement in August that the Qurayyah IPP could be gas-fired sparked further speculation that the government is altering its fuel policy. Re-assessing the Qurayyah fuel U-turn suggests that Saudi Arabia is keen to reaffirm its commitment to oil-fired power generation.

All applications made for either fuel choice will be eligible for prequalification. SEC has said that it will not ask for the documents to be resubmitted “unless they have said explicitly that they are only interested in combined cycle [and the project is oil-fired]. Otherwise, if we require more details, we will ask for them.”

The winning bidder will build, own and operate the power plant, which will have a capacity of about 1,800MW. The IPP will be built next to SEC’s existing facility at the Qurayyah site. It will be the third project to be developed under SEC’s IPP programme.

A project company will be formed by SEC and the successful developer or developer consortium. It will sell its entire output to SEC under a power purchase agreement (PPA).

The US’ Citigroup is financial adviser to the state-owned company in the tender while the law office of Mohammad bin Saud al-Rasheed, in association with Baker Botts, is legal consultant. Germany’s Fichtner is technical consultant.