The banks were asked in an early-July note to present their credentials to SEC for financial advice on power and water projects, with special reference to the recent progress towards IPP and IWPP development in the kingdom. Power sector sources say they expect a more concrete move after the next SEC board meeting, scheduled for September.

Although there are no indications yet as to the size of the project - or projects - that are under consideration, a number of international developers have already approached the Saudi Arabian General Investment Authority for licences to carry out large-scale co-generation projects. They include Japan's Sumitomo Corporation, which has proposed a plant with a capacity of about 700 MW and 730,000 cubic metres a day of desalinated water.

The government early this year appointed a power regulator to oversee the introduction of competition in electricity generation in the kingdom. SEC itself is unbundling its own services in order to compete effectively. SEC has already selected financial, legal and management advisers for the restructuring process. They are Kuwait-based Gulf Investment Corporation, US law firm White & Caseand the US' Charles Power, formerly Arthur D Little.

With negotiations on the landmark gas initiative still moving slowly, there is a need for new projects to increase power and water capacity. Some reports on the gas initiative negotiations have said that if no agreement is reached soon in negotiations, some of the projects - including IWPPs - could be tendered independently.