South Korea’s Samsung Engineering has been awarded the contract to build the estimated $3bn Yanbu 3 power plant in Saudi Arabia.

The client has confirmed the appointment of Samsung and is making some final adjustments to the contract before it sends the formal letter of award, according to sources close to the project. The Yanbu power project will have a capacity of 2,500MW.

Samsung was competing against China’s Sepco III Electric Power Corporation for the contract. The client for the project, Saudi Arabia’s Saline Water Conversion Corporation (SWCC), had received bids from four groups in November 2011 for the engineering, procurement and construction (EPC) deal and reduced the shortlist to two competing bidders earlier in 2012.

SWCC awarded South Korea’s Doosan the estimated $1bn contract to build the desalination component of the Yanbu 3 project in mid-November, according to sources in Riyadh. Four groups had submitted bids for the 550,000 cubic metre per day desalination component in July 2011.

The Yanbu 3 project has evolved many times since its inception. SWCC and the Power & Water Utility Company for Jubail & Yanbu (Marafiq) originally planned to develop separate power projects.

SWCC’s Yanbu 3 project was originally planned as an independent water and power project (IWPP) and was to be the cornerstone of Saudi Arabia’s privatisation programme. Not only was the new Yanbu 3 project to be a private power project, but the deal was also set to include the sale of the first two phases of the Yanbu project.

However, in July 2009, the government decided to cancel the Yanbu 3 IWPP and merge it with another power and water project at Yanbu, which was planned by Marafiq. As a result of the global financial meltdown, it was decided that the new scheme would be developed on an EPC basis as opposed to as an IWPP.