Suez Energy selected for Riyadh power plant deal

02 March 2010

Belgian firm’s alliance with Al-Jomaih places it in line to build 2,000 MW scheme

Saudi Electricity Company (SEC) is expected to award a contract to build the country’s next independent power project (IPP) to Belgium’s Suez Energy International and the local Al-Jomaih Group.

Known as PP11, the gas-fired power plant will have a capacity of 2,000MW and will use natural gas feedstock with Arabian super light crude as a backup fuel.

The bid entered by Suez and Al-Jomaih was one of three submissions and was priced between the two rival bids.

A team of Japan’s Marubeni Corporation, Kansai Electric Power Company, also Japanese, and the local Saudi Masader Company for Power & Water submitted the lowest bid in December. The consortium’s tariff was 28 per cent lower than the bid from Suez and Al-Jomaih.

The Japanese group bid with Germany’s Siemens and South Korea’s Samsung Corporation as its nominated turbine supplier and engineering, procurement and construction (EPC) contractor respectively.

It is a similar configuration to that which a team of the UK’s International Power with Saudi Oger and Korea Electric Power Corporation opted for. That consortium has chosen Siemens and South Korea’s Doosan Heavy Industries & Construction as its EPC contractors. However, its price was 67 per cent higher than bid submitted by the Marubeni consortium.

Rival bidders have suggested the Marubeni group may have omitted the fuel cost from its tariff, but the consortium insists that this is not the case.

In its request for proposals (RFP) for the PP11 scheme, Saudi Electricity specified the tariff should include capital and operating expenditure, which should in turn include fuel and financing costs.

Other developers have also suggested that the anomaly may have been caused by a miscalculation of the cost of electricity. For its previous IPP scheme at Rabigh, SEC had asked bidders to calculate their price based on the total number of kilowatt hours that the plant is capable of producing.

According to a source close to the deal, the difficulty associated with comparing bids on a ‘like for like’ basis has slowed down the bid process significantly.

The PP11 project is one of three independent power projects (IPPs) in the kingdom aimed at adding 5,200MW to the domestic grid by 2015.

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