Samge brings PP9 to life in Riyadh

02 February 1996

IN the desert east of Riyadh, contractors have begun work on the largest crude oil-fired power plant in the world. Once operational, the grassroots combined-cycle PP9 station will enable Saudi Consolidated Electric Company for the Central Region (Sceco-Central) to supply 1,300 MW of power to the Saudi capital area. Together with the PP8 station, which is already under construction, the scheme will free up 1,700 MW of power being supplied to the central region from Sceco-East and go a long way to reduce the country's power problems.

The main contractor on the project is Saudi American General Electric (Samge), the local affiliate of giant US conglomerate the General Electric Company (GE). The PP9 project ranks among the largest projects it has ever undertaken in the kingdom in nearly 50 years of local activity. PP9 is being built on a 2 million-square-metre site, 30 kilometres from the capital. The workforce on the scheme is expected to peak at 2,500 in the kingdom alone, not to mention the GE and Raytheon employees working in the US. Some 45 per cent of the plant, mainly linked to the heat recovery boilers, condensers and civil works, will be fabricated in the kingdom. The four combined-cycle units of the 1,300-MW station will consist of 16 gas turbines, four steam turbines, and 20 generators.

The first 200-MW phase of the project is set to come on stream in April 1997. The first combined-cycle block will come on stream by the end of 1997 and provide an additional 300 MW. Thereafter, power will be brought on at a rate of 300 MW a year, implying a final completion date of end-2000. Being closed cycle, there will be minimal consumption of water, which will be drawn from ground wells.

Samge's portion of the contract embraces the supply and installation of the generating capacity. All civil and electrical work is being carried out by the Jeddah-based Saudi Binladin Group. There has been one change to the original line-up of contractors because Jubail-based Saudi Belleli Heavy Industries pulled out of the scheme in late 1995 on account of the financial problems of its Italian parent company. The Belleli contract - to supply and install the 16 major boilers, four condensers, fuel tanks, and a fuel pipeline link to the planned multi-products pipeline from Dhahran to Riyadh - has been taken over by the US' Raytheon Engineers & Constructors. The UK office of Switzerland's Electrowatt Engineering Services is supervising construction.

Connecting PP9 to the regional power grid is the subject of two further contracts. The Tyneside-based Reyrolle, part of the UK's Rolls Royce Industrial Power Group, is to supply and install the huge 380-kV substation, which will to link PP9 to the Sceco-Central/Sceco-East grid. The substation will have 30 bays of 380-kV gas-insulated switchgear, plus control and protection systems and other plant and equipment, including 132-kV switchgear. Construction will be timed to coincide with the start up phases of PP9. The first is due for completion in 1997 and the second in 1999.

Logistical challenge The local/Italian Saudi Sadelmi Technical Construction Company is to carry out the civil engineering work on the scheme, and also has the contract to construct the 380-kV and 132-kV overhead lines, which link PP9 and the substation to the grid. The local AlBawardi Consulting Engineers is supervising construction of both the substation and the overhead line.

The huge size and desert location of PP9 presents the contractors with a number of logistical elements to co-ordinate. The gas and steam turbines and some of the control systems are being supplied from the US.

Local steel fabricators are to build the boilers and condensers. The pipeline is still the subject of discussions with Saudi Aramco and the substation contractors. Yet, execution has kept rigidly to timetable so far.

The financing arrangements have not been so rigidly respected and have changed since the original deal was drawn up. The initial contract terms called for a minimum cash balance to be held in an escrow account and drawn down by the contractor as sections of the scheme were completed. Instead, as each milestone is reached, the client authorises the Saudi Arabian Monetary Agency (SAMA) to release payments, in the form of a cheque made out directly to the contractor. So far, Samge says that payments are taking no more than three to four weeks to process.

The source of the finance is unchanged, however. Payments are being made from the special SAMA fund set up in January 1995 to hold the extra revenues raised from the electricity tariff increases introduced in the 1995 budget. It was the creation of the this fund which enabled PP9 to go ahead, but the rate at which revenues flow into the fund means that the scheme is being executed over 70 months rather than the 42 months originally planned.

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