Sogex Oman set for Arzew IWPP

28 June 2002

Kahrama, the owner and developing consortium for the country's first independent water and power project (IWPP), is in advanced negotiations with Sogex Omanover the contract for the operation and maintenance (O&M) and day-to-day management of the plant, to be located at Arzew.

Sogex, which operates Oman's Ghubrah co-generation plant, is the only private sector company in the region to have operated a multi-stage flash (MSF) plant for an extensive period - a key condition for the selected contractor (MEED 1:2:02).

Kahrama is an 80:20 venture between the foreign developer Black & Veatch (B&V)of the US and the Algerian Energy Company (AEC), an investment company which itself is a 50:50 joint venture between the state energy and power companies, Sonatrachand Sonelgaz. The negotiations with Sogex include discussions over whether the Omani company will take a 10 per cent equity stake in the plant, in which case B&V's equity participation would be reduced to 70 per cent. The O&M contract should be finalised by the end of August, a source close to the project said.

Earlier this year, Kahrama awarded the $260 million engineering, procurement and construction (EPC) contract to a Japanese consortium of Itochu Corporationand Ishikawajima-Harima Heavy Industries. At the same time, the original desalination capacity of the plant was doubled to 88,000 cubic metres a day (cm/d), utilising all the steam produced in meeting the plant's power generation capacity of 314 MW. Construction of the first 100-MW train is expected to take 25 months, with GE Power Systemsof the US providing the turbines.

Total project costs for the plant are $400 million, of which $100 million will be in the form of shareholders' equity. The majority of the $300 million debt will be provided through export credits. Financial close is expected to be reached before the end of the year.

The IWPP, which will produce much-needed water for the Oran region, received an explicit official seal of approval when President Bouteflika officiated at the 19 May groundbreaking ceremony at the designated 25-hectare site east of the GL2Z liquefaction plant at Arzew. The water will be taken by Sonatrach in a 25-year, 100 per cent take-or-pay agreement, while Sonelgaz has signed a similar agreement for the power offtake.

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