Yanbu power project overcomes delays

03 October 2011

Expansion of Yanbu power and water complex finally moves forward after years of delay

Saudi Arabia’s Saline Water Conversion Corporation (SWCC) has opened engineering, procurement and construction (EPC) bids to build a 2,500MW power project at Yanbu, in a sign that the project is finally moving closer to being developed after several years of delay.

According to an official at SWCC, four bids were submitted for the project, which will be built on a plot to the south the existing Yanbu power and desalination plant:

  • Sinopec (China)
  • Sepco III Electric Power Construction Corporation (China)
  • Samsung Engineering (South Korea), Shanghai Electric (China) and Al-Toukhi Group (Saudi Arabia)
  • Al-Arrab Contracting Company (Saudi Arabia) and United Contractors (Saudi Arabia)

SWCC opened the bids for the power complex at Yanbu in September, representing a major step forward for the project, which has evolved significantly and stalled many times.

Bid evaluation is currently under way, but early indications suggest that the Samsung Engineering-led bid is the most competitive and the Al-Arrab bid is the second most competitive.

Construction is expected to take three years from site handover to commercial operation. Heavy fuel oil will be the main fuel source for the project, with diesel oil used for start-up of the plant. The plant will be connected to the Saudi Electricity Company (SEC) grid through a newly constructed 380kV substation at Yanbu.

Bid evaluation is set to take around one month and is being conducted at the same time as a separate tender for a desalination facility to also be developed at the site. Bids for the desalination contract were submitted in July (MEED 26:7:11) by four companies:

  • Fisia Italimpianti (Italy) - $1.01bn without discount and $920m with the discount applied
  • Doosan (South Korea) - $1.018bn
  • Sidem (France) - $1.191bn
  • Samsung Engineering (South Korea) with Acwa Sasakura (Saudi Arabia) - $1.204bn

Seawater for the desalination unit will be obtained through an intake channel and an outfall culvert will discharge seawater and brine back into the Red Sea.

The Yanbu 3 project has evolved many times since its inception. SWCC and the Power & Water Utility Company for Jubail & Yanbu (Marafiq) originally planned to develop separate power projects.

SWCC’s Yanbu 3 project was originally planned as an independent water and power project (IWPP) and was to be the cornerstone of Saudi Arabia’s privatisation programme. Not only was the new Yanbu 3 project to be a private power project, but the deal was also set to include the sale of the first two phases of the Yanbu project.

However, in July 2009, the government decided to cancel the Yanbu 3 IWPP and merge it with another power and water project at Yanbu, which was planned by Marafiq. As a result of the global financial meltdown, it was decided that the new scheme would be developed on an EPC basis as opposed to as an IWPP. The new facility would have a capacity of 1,700MW of power and 121 million gallons a day.

The deadline for bids to build the desalination and power components was set for 21 September 2010. Then in January 2011, the scope of the power component was changed from 1,700MW to 2,500MW. That led to the deadline for bids on both the power plant and adjacent 550,000-cubic metre-a-day desalination facility to be extended to March.

Marafiq later exited the project and the deadlines were extended “on the request of the bidders”, according to SWCC.

However, Marafiq had already started the tender process for another power and water facility at Yanbu to meets its needs. A facility with a capacity of 850MW of power and 60 cubic metres a day (cm/d) of water was tendered and awarded to South Korea’s Hanwha in April (MEED 29:4:11). The EPC contract was worth SR3.921bn ($1.05bn).

Saudi Arabia’s actual and forecast power demand
e=Estimate; f=Forecast. Source: Ministry of Water & Electricity

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