Saudi Arabia extends Qurayyah plant bid deadline

14 March 2011

Bids to build independent power project due by 26 March

Saudi Electricity Company (SEC) has extended the deadline for bids to build, own and operate an independent power project (IPP) at Qurayyah. Developers now have until 26 March to submit bids instead of 19 March.

This is the second extension of the deadline from the original submission date of 28 February. According to an industry source, the second delay is in response to the earthquake in Japan.

The winning bidder will build, own and operate the combined-cycle gas turbine (CCGT) power plant, which will have a capacity of 1,800-2,100MW.

The following groups were prequalified in December 2010:

  • Acwa Power (Saudi Arabia) with Samsung C&T (South Korea) as engineering, procurement and construction (EPC) contractor
  • Korea Electric Power Corporation (South Korea)/Sumitomo Corporation (Japan) with Hyundai Engineering & Construction (South Korea) as EPC contractor
  • Marubeni Corporation (Japan) with Doosan (South Korea) and Hanwha (South Korea) as EPC contractor
  • AES Corporation (US)/Saudi Masader Company for Water, Power & Gas (Saudi Arabia) with Sepco 3 (China) as EPC contractor
  • GDF Suez (France)/International Power (UK) with Hyundai Heavy Industries (South Korea) as EPC contractor using turbines from GE (US)
  • Tenaga Nasional Berhad (Malaysia)/Arabian Bemco Contracting Company (Saudi Arabia) with Iberdrola (Spain) as EPC contractor
  • Powertek Berhad (Malaysia)/Saudi Oger (Saudi Arabia) with GS Engineering (US)/Sepco 2 (China) as EPC contractor

However, AES has since terminated its participation in the tender leaving six groups in competition for the contract. A maximum of two Saudi Arabian banks are allowed to back each bid and each Saudi Arabian bank can support up to two bids.

The power project was originally launched as an oil-fired facility when developers were first approached in May 2010. By August, SEC had taken the decision to change the fuel for the project to natural gas. A revised request for qualification (RFQ) was issued as a result. Companies that responded to the first RFQ were asked to resubmit their documents, while developers that missed the first round could enter expressions of interest for the gas-fired project by 11 August.

According to a source at SEC, it recently reviewed its decision to change the primary fuel for Qurayyah IPP from heavy fuel oil to natural gas. Sources at SEC indicated that the project could go back to its original form as an oil-fired project, but this option has since been dropped.

Construction of the plant and associated facilities is scheduled to begin no later than August 2011 and the project commercial operation date is scheduled for June 2014. The IPP will be built next to SEC’s existing facility at the Qurayyah site. It will be the third project to be developed under SEC’s IPP programme.

A project company will be formed by SEC and the successful developer or developer consortium. It will be 50 per cent owned by the successful bidder, with the remaining 50 per cent held by SEC.

The project company will sell its entire output to SEC under a 20-year power purchase agreement (PPA). SEC will supply gas to the project company on an energy conversion basis. SEC will source the required gas under a separate arrangement with Saudi Aramco.

The US’ Citigroup is financial adviser to the state-owned company in the tender, while the law office of Mohammad bin Saud al-Rasheed, in association with Baker Botts, is legal consultant. Germany’s Fichtner is technical consultant.

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