The project entails the acquisition of the existing Hidd phases I and II power and desalination complex and the implementation of the Hidd phase III expansion, calling for the addition of 60 million gallons a day (g/d) of desalination capacity. Existing capacity is 1,000 MW and 30 million g/d.

The successful bidder will be required to ensure 10 million-15 million g/d of new capacity by March 2007 with full water flows by the end of 2008, utilising steam from the existing plant. Current desalination capacity in the kingdom is 77 million g/d and is estimated to reach 138 million g/d by 2012.

A 20-year power and water purchase agreement (PWPA) will initially be signed by the developer with the Ministry of Electricity & Water (MEW). However, with the sale of Hidd, the ongoing implementation of the 1,000-MW Al-Ezzal IPP and the decommissioning of ageing facilities, MEW will control an increasingly small percentage of generation capacity and the government has agreed a proposal for the ministry to be converted into an independent regulator. The timescale remains under discussion.

Al-Ezzal was awarded to a team of Belgium’s Tractebeland Kuwait’s Gulf Investment Corporationin 2004. The decision to proceed swiftly with further privatisation was spurred by the success of Al-Ezzal, which was tendered smoothly on schedule and attracted a very competitive price. MoF has retained the advisory team of BNP Paribas, the UK’s Mott MacDonaldand Freshfields BruckhausDerringer(MEED 29:4:05).