Saudi's SWCC to Issue EPC Tenders for $6 Billion Ras al Zawr Power and Water Plant

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Ras al Zawr power and water desalination plant is set to be re-launched by Saline Water Conversion Corporation (SWCC) (Riyadh, Saudi Arabia), the government body responsible for desalinating sea water. SWCC has announced plans to hold a road show on October 19 for companies interested in bidding for the estimated $6 billion project, which is located on the Persian Gulf coast in the country's Eastern Province.

The project was originally intended to be built and operated by a private consortium consisting of Sumitomo Corporation (TYO:8053) (Tokyo, Japan) and Malakoff Corporation Berhad (Kuala Lumpur, Malaysia). With the onset of the global financial crisis, banks were reluctant to provide funding, especially for large-scale projects, and the consortium collapsed.

However, the Saudi government considers the project too important to be delayed and has decided to restart the bidding process and finance it through SWCC. The cost is expected to be less than the original $6 billion projected by the Sumitomo-Malakoff consortium. SWCC will re-tender the project on a two-package basis, one each for the power and desalination components.

For the first phase of both units, tenders will be invited on an engineering, procurement and construction basis. However, the government's decision to proceed with the project without the private sector has caused some experts to question the future of private sector involvement in similar projects. SWCC has indicated that financial reasons, rather than political ones, drove the change in plans for the project.

The complex at Ras al Zawr will consist of a 1,000-MW power plant and a water desalination plant capable of producing 1 million cubic meters of potable water each day. However, there is speculation that the power component of the complex could be linked to Saudi Arabian Mining Company's (SAU:1211) (Ma'aden) (Riyadh) need for a power plant for its aluminum complex located in close proximity. Proponents of the connection point to the economies of scale that could be obtained by combining the SWCC and Ma'aden power plant requirements.

A possible stumbling block to the joint power plant could be the time schedule for the Ma'aden aluminum complex. Ma'aden requires power availability for the project by April 2103; if any doubts are raised about the capability of SWCC to provide power by that date, Ma'aden may decide to proceed with its own power plant.

The Ma'aden aluminum complex at Ras al Zawr will consist of an alumina refinery, using bauxite transported by rail from the Al Zabirah deposit, and a smelter that will convert alumina from the refinery into aluminum. The original specification for the complex envisaged a consumption of 3.5 million tons per year of bauxite for a yield of 1.4 million tons per year of alumina and thence approximately 650,000 tons per year of aluminum. These figures have been revised upwards to 4 million tons per year of bauxite, 1.8 million tons per year of alumina, and 740,000 tons per year of aluminum.

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