Saudi Electricity Company mulls power plant award through direct negotiation instead of tender
Saudi Electricity Company (SEC) is in negotiations with local power developer Acwa Power to build a second independent power project (IPP) at Qurayyah.
Acwa Power was selected to build the first Qurayyah IPP in the second quarter of 2011. The combined-cycle gas turbine plant will have a capacity of nearly 2,000MW.
The developer submitted a bid of 7.417 hals/unit in March, which was significantly cheaper bid than the five other competitors (MEED 1:4:11).
The second lowest bid was submitted by Japan’s Marubeni and South Korea’s Doosan and Hanwha with a bid of 8.56 hals/unit for a 2,030MW project.
According to the head of SEC’s IPP programme Amer al-Swaha, SEC has entered into negotiations with Acwa Power for the second Qurayyah IPP due to the competitive price entered for Qurayyah 1 IPP.
“We are considering giving them a contract for six blocks instead of three” said Al-Swaha. SEC’s original schedule planned for Qurayyah 1 to come online in 2014, while Qurayyah 2 was to be completed by 2015.
Should Acwa be awarded a contract for the second project, both phases would be completed by 2014. This is a significant factor for SEC, according to Al-Swaha in addition to a likely discount on the price of the second IPP.
Acwa Power is currently in final negotiations with lenders for Quarayyah 1 IPP. Three export credit agencies (ECAs) and six commercial banks are set to lend for the project (MEED 27:7:11). The sponsors are targeting financial close for the end of August/early September.
After Qurayyah 2 is awarded, SEC will tender contracts for a 1,800MW IPP at Dheba to be in service by 2016 and another project at Rabigh with a capacity of 1,800MW, which will be in operation the following year. SEC also plans to develop 2,520MW IPPs at Abu Kamis and Jeddah South.
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