Black & Veatch Players in $330 Million Algerian Power and Water Plant

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Japanese companies Ishkawajima-Harima Heavy Industries (IHI) (TOKYO:IHI) (Tokyo, Japan) and the Itochu corporation (TOKYO:8001) (Tokyo, Japan) have formed a project consortium which has signed a $333 million contract, to build Algeria's first large-scale water desalination and power plant, with Kahrama, an independent water and power producer. Kahrama is established with equity participation from the African subsidiary of U.S. privately owned engineering firm Black & Veatch (Kansas City, Montana) (80%) and the Algerian Energy Company (AEC) (20%). AEC in turn is owned 50/50 by state owned hydrocarbon company Sonatrach and state electricity company Sonelgaz.

This is a full turnkey contract that includes the engineering, procurement, construction, installation and performance test of the plant.

The plant is due for completion in June 2005 in the industrial zone of the coastal Mediterranean city of Arzew, which is located near Oran Algeria's second largest city. The project includes the construction of natural gas generation facilities with an output of 320 MW and facilities to desalinate seawater using exhaust heat from the power plant producing around 88,000 cubic meters of water daily. The agreement covers Sonatrach and Sonelgaz drawing water and electricity over the next 25 years. The project aims to increase the output of power generation in Arzew, which is an Algerian industrial base, and to replenish water shortages in Oran caused by population growth and low rainfall, while still meeting industrial water demands.

The new project will be powered from local gas supplies. The project is the first to be undertaken by an independent producer in the country and was approved by the Algerian government in the hope of increasing power generating capacity and alleviating the shortage of fresh water.

In 1982 and 1998, IHI and Itochu constructed a state-of-the-art LPG complex in the area adjacent to the Kahrama construction site in the Azrew industrial zone. IHI has also supplied 20 desalination plants and power generation plants throughout the Middle East.

Independent water and power producers are planning combined cycle power plants and desalination plants throughout the Middle East.