Saudi Electric Awards $84 Million Power Contract to Al-Sharif Group and India's KEC International

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Researched by Industrial Info Resources (Sugar Land, Texas)--Saudi Electric Company (SAU:5110) (SEC) (Riyadh, Saudi Arabia) has awarded an $84 million transmission network contract to KEC International Limited (BSE:532714) (Mumbai). KEC will execute the contract in a joint venture with Saudi Arabia's Al-Sharif Group (Jeddah, Saudi Arabia). The scope of the contract includes design, engineering, supply and installation of a 380-kilovolt (kV), 163-kilometer transmission line connecting two substations located north of Riyadh, and a 33-kV, 37-kilometer transmission line connected on steel poles in Najran. The contract is expected to be completed in 30 months.

The transmission project is expected to strengthen the country's electricity network to meet growing power demand. Saudi Arabia, which has embarked on an ambitious infrastructure development program to diversify the country's economy and reduce dependence on oil, is expected to witness a surge in power demand. Experts indicate that the country's electricity consumption is estimated to increase 7% to 8% on a yearly basis.

KEC also has secured a $14.84 million contract to strengthen and augment the transmission network at N'Djamena in Chad. The firm has a presence in 20 countries including Kenya, Egypt, India, South Africa and Afghanistan.

State-controlled SEC is the biggest power utility in the country in terms of market value. SEC was established in December 1999 through the integration of 10 regional electricity companies and power projects. Presently, the company's total installed power generating capacity is about 37,000 MW. SEC plans to increase its power generating capacity to 40,000 MW by 2010. The firm also plans to invest about $80 billion to augment power generating capacity by 20,000 MW by 2018. Officials have indicated that about $20 billion and $30 billion will be spent on distribution and transmission projects, respectively.

The company also has proposed to spend another $20 billion on independent power producing (IPP) projects, which are expected to add an additional 10,000 MW to the country's electricity generating capability. Some of the IPP projects expected to begin operations during 2013-21 are the 1,000-MW Dheba power plant, the 800-MW Shuqaiq project, the 2,000-MW unit at Riyadh PP11, the 2,000-MW Qurayyah power plant, the 1,200-MW power plant at Rabigh, and the 2,250-MW project at Ras Azzour.

In a related development, SEC awarded a $1.22 billion contract to Doosan Heavy Industries & Construction Company (SEO:034020) (Gyeongsahngnam-Do, South Korea) to augment the Al-Qurayyah power plant. Doosan will execute this contract in partnership with Arabian Bemco Contracting Company (Jeddah, Saudi Arabia). The scope of the contract includes conversion of the open-cycle gas turbine units to combined-cycle units. The power project, which will be refurbished and augmented in capacity by 1,241 MW, is expected to begin operations by June 2014. SEC is reportedly seeking funding from Islamic bonds and banks to complete financing for this $1.8 billion project.

In August this year, ABB Limited (NYSE:ABB) (Zurich, Switzerland) secured a $60 million contract from SEC to improve and enhance the distribution efficiency of 28 substations. ABB will undertake power correction for nine substations around Riyadh rated at 132/33 kV, and 19 substations rated at 33/13.8 kV in the northwestern, central and southern regions of the country. The contract includes design, engineering and installation of equipment such as control systems, capacitors, switchgear, and supervisory control and data acquisition system. The contract is expected to be completed by 2010.

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