State utility Saudi Electricity Company (SEC) has shelved the project to convert the PP9 power plant in Saudi Arabia to a combined-cycle facility.

MEED reported in April that contractors had submitted bids for the scheme, with a consortium of Spain’s Initec Energia and Saudi Services for Electro Mechanical Works (SSEM) submitting the lowest lump-sum bid of $320m.

After selecting the Initec Energia/SSEM as preferred bidder, no further progress was made with the contract award and, according to sources within the kingdom, the PP9 expansion project has been cancelled. It is unclear why the scheme has been cancelled and whether it will be retendered in the future.

The low bid for the conversion scheme had been about 22 per cent lower than the SR1.55bn ($413m) price submitted by the local Alfanar Construction, the second-lowest bidder. The local National Contracting Company (NCC) submitted the third-lowest price of SR1.58bn, which was followed by a SR1.74bn bid from the US’ Black & Veatch.

The existing PP9 plant was constructed as a 1,200MW facility between 1995 and 2003 and, following a couple of expansions, the capacity reached 3,500MW by 2009. The proposed conversion scheme would have increased its capacity by about 240MW.

According to sources within the kingdom, Riyadh is assessing project programmes and prioritising essential schemes due to the pressure on government accounts from falling oil revenues. In early October, it was reported by the US’ Bloomberg that the Finance Ministry had ordered government clients to not award any project contracts for the rest of the year.