Saudi Electricity Sets February Deadline for Bids for Gas-Fired al Qurayyah Power Plant

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Researched by Industrial Info Resources (Sugar Land, Texas)--State-controlled Saudi Electricity Company (SAU:5110) (SEC) (Riyadh, Saudi Arabia) has issued a deadline of February 28, 2011, for the submission of bids to construct a gas-fired power plant at al Qurayyah.

The pre-qualification process for bidding has already been completed, and according to Amer al Swaha, the head of independent power projects (IPP) at SEC, the requests for proposals were issued on November 3.

The list of 14 pre-qualified companies includes Korea Electric Power Corporation (NYSE:KEP) (KEPCO) (Seoul, South Korea), AES Corporation (NYSE:AES) (AES) (Arlington, Virginia), General Electric Company (NYSE:GE) (GE) (Fairfield, Connecticut) and International Power plc (LSE:IPR) (London, England).

Several Japanese companies are also expected to feature in the bidding process, including Marubeni Corporation (TYO:8002) (Tokyo, Japan), Mitsubishi Heavy Industries (TYO:7011) (MHI) (Tokyo), the Sumitomo Corporation (TYO:8053) (Tokyo), and Mitsui & Company Limited (NASDAQ:MITSY) (Tokyo).

The winning bidder will construct the plant on a build, own and operate (BOO) basis, and will have a 50% stake in the plant. The remaining 50% will be held by SEC, which will also purchase all of the power generated by the plant under a 20-year power purchase agreement (PPA).

The plant is the third in a series of six IPPs designed to add about 11,000 megawatts (MW) in generating capacity. The first two in the series are the 1,200-MW Rabigh power plant, scheduled to begin operations in July 2012, and the 2,000-MW Riyadh PP11, which is scheduled to start operations in May 2012. The new plant, which will be known as al Qurayyah IPP1, will have a generating capacity of between 1,800 MW and 2,100 MW. Construction is expected to cost about $1.8 billion.

Originally the plant was to be fired by heavy fuel oil (HFO), but will now use up to 300 million cubic feet of gas that will be supplied by SEC. According to the project schedule, the financial closure for the project is August 31, 2011. The plant is scheduled to be fully operating by June 1, 2014.

Electricity demand in Saudi Arabia is rising rapidly. Recent estimates place it at a growing at a rate of 8% each year, and demand is expected to triple to 121,000 MW by 2032. The second phase of the SEC IPP project calls for the construction of the 1,000-MW Dheba power plant on the Red Sea coast by 2016, the 2,520-MW Ras Azzaur plant in the Eastern province by 2020, and the 800-MW Shuquaiq plant, also on the Red Sea coast, by 2021.

Amer al Swaha expects that SEC will add to the list of six IPPs already planned to meet the rising demand. "We have a future plan for al Qurayyah 2," he said. Al Swaha indicated that SEC plans to increase the installed generating capacity from the current 50,000 MW to at least 70,000 MW by 2020, requiring a planned investment of approximately $80 billion.

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