Belgium’s Suez Energy International is in exclusive talks to develop Qatar’s largest power plant, after emerging as the preferred bidder.

The General Electricity & Water Corporation (Kahramaa) is expected to make an award on Ras Laffan C imminently, with the signing of the key project agreements due by the end of February.

Suez has been competing with the UK’s International Power and the Marubeni Corporation of Japan for the independent water and power project (IWPP). According to sources close to the project, it is now in exclusive talks with Kahramaa.

Following an award, a joint venture company will be formed to implement the IWPP on a build-own-operate basis for an initial period of 25 years. Assuming it does sign a contract for the plant, Suez will take a 40 per cent stake in the company, with the remaining 60 per cent divided between Qatar Electricity & Water Company (QEWC) and Qatar Petroleum (QP).

The plant will have a capacity of 2,600MW and 55 million gallons a day of desalinated water.

Work is expected to begin in March, with the first 1,600MW due to come on line in the summer of 2010. The remaining capacity will be operational in 2011.

Ras Laffan C will surpass the ongoing Mesaieed independent power project, which at 2,000MW was previously the country’s largest power scheme.

The financing model being used for the plant is also unusual. QP will raise about $3bn in project finance and transfer the sum to the developer.

Royal Bank of Scotland is advising QP, while HSBC is advising Kahramaa. The latter will buy the plant’s output before selling it. Financial close is expected by May 2008.

Following Ras Laffan C, no new IWPP projects are likely to be launched in the country in 2008, according to QEWC sources.

A smaller IWPP is due to be tendered in 2009. Kahramaa is understood to be evaluating proposals for the consultancy contract on the project. The successful bidder will propose the capacity and location of the plant.

Qatar’s demand for power and water is growing at about 15 per cent a year, a similar rate to other booming markets in the Gulf such as Dubai. Industry advisers say further projects are inevitable if Qatar is to meet this demand.

“If someone is saying there will be no new projects before 2009, then I am very surprised,” says Jacco Jansen, regional director at Dutch firm Kema. “Demand is huge.”

Kema, along with another Dutch firm, Royal Haskoning, has prepared a 30-year power and water demand forecast for the country.

Kema is the technical adviser on the Ras Laffan C project and is also one of the consultants in the running for the next IWPP.