Saudi Electricity Company (SEC) is planning a SR79.6bn ($21bn) programme to award contracts for nine independent power projects (IPPs) between 2010 and 2017, adding 9,360MW to the kingdom’s power generating capacity.
Ali al-Barrak, chief executive officer of SEC, tells MEED that it will mean the overall programme of IPPs planned by SEC will add almost 15,000MW of capacity to the national grid, at a total cost of more than SR100bn.
The nine plants will start operations between 2014 and 2021 and will be located across the kingdom.
The first plant will be built at Daba on the northwest coast. This will be followed by further plants at Jubail or Ras al-Zour in the eastern province, Jeddah on the west coast, Shuqaiq in the east, and Al-Uqair in the eastern province or Salwa near the border with Qatar.
The plants are in addition to its three private power projects that SEC announced in 2007 at Rabigh, Riyadh and Qurrayah.
Together, the first three IPPs will have a combined capacity of 5,200MW and will cost SR21bn.
In late October, SEC extended the deadline for bids for the 1,200MW Rabigh IPP by one month to 1 December to allow developers more time to prepare their proposals.
Potential bidders for the project include Belgium’s Suez Energy International with the UK’s International Power and Saudi Oger; the local Acwa Power Projects with Korea Electric Power Corporation and Japan’s Mitsubishi Corporation; and Japan’s Marubeni Corporation with the local United Infrastructure Developers Company.
SEC received a large number of expressions of interest for its second IPP project, known as PP11, in Riyadh by the deadline of late October. The plant will have a capacity of 2,000MW.
“We have already received expressions of interest and we are currently evaluating them,” said Al-Barrak, speaking on the sidelines of the Saudi Water & Power Forum in Jeddah on 3 November.“We received more than 30 expressions of interest.”
According to Al-Barrak, the utility will issue a request for proposals for the project within two months.
The third of the three original IPPs is planned at Qurayyah in the east of the country and will also have a capacity of 2,000MW. A request for proposals is expected by the end of 2009.
In addition to the nine IPPs, SEC plans to award engineering, procurement and construction contracts for 12 other power plants between 2009 and 2016. They will cost a further SR122bn and will provide 14,725MW of power capacity.
A significant restructuring of SEC is also being planned by Riyadh, with the reorganisation expected to take effect from next year.
The utility’s generation assets will be unbundled into four companies as part of wider government plans to liberalise the electricity sector.
The final objective is for the companies to compete with each other in an open market.
Each company’s portfolio of assets will consist of different types of power plants.
SEC’s generating assets will be allocated to the new entities according to their size, the type of fuel they use as feedstock and their age.
“Every company will have equivalent assets so they can compete with each other,” said Al-Barrak.
The companies could eventually be privatised, but at first they will be wholly owned by SEC.
“We have started planning the restructuring programme,” said Al-Barrak. “We hope it will be approved before the end of the year and we will start implementing it in 2009.”
Saudi Arabia’s Supreme Economic Council has been studying the restructuring plan, which will be carried out in three phases.
As well as unbundling SEC into four companies, the first phase of the energy industry restructuring programme will involve the creation of a Saudi Power Procurement Company to take over from the Water & Electricity Company (WEC).
WEC is a joint venture between the Saline Water Conversion Corporation and the SEC, which was set up to buy electricity from the kingdom’s initial independent water and power plants (IWPPs).
Phase one also calls for the establishment of the Saudi Grid Company to own, operate and manage the kingdom’s electricity transmission system (MEED 17:3:08).
In 2007, SEC had annual revenues of SR21.3bn and made a net profit of SR1.6bn.
By the end of that year it had generation capacity of 36,949MW – up 6.1 per cent over the year. However, peak loads increased almost twice as fast, by 11.9 per cent to 34,953MW.