Wartsila-Marafeq Consortium Frontrunner for 200 Million-Euro Contract for Syria's First Private Power Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--A consortium comprising leading multi-utility company Marafeq Qatar (Doha, Qatar) and global engineering company Wartsila Corporation (HEL:WRTBV) (Helsinki, Finland) is at the forefront of the race to win the contract to develop Syria's first private power project. If the consortium secures the contract, Wartsila will implement a turnkey contract for the project involving design, construction and commissioning of the plant. According to Syria's Electricity Minister Ahmad al-Kayali, another company that has qualified up to the last stage is Terna SA (Athens, Greece).

The contract for the 200 million-euro thermal power plant will be awarded on a 25-year build, own and operate mode. The government of Syria will supply the plant with free fuel, and purchase and distribute the electricity generated. The thermal power plant will have a generation capacity of 240 MW. The project site is Nasserieh, which lies northeast of Damascus, the capital city of Syria.

The Chief Executive Officer of Marafeq, Mahmoud Al-Khoshman, said that his company was trying to obtain a loan of 100 million euros from different European sources such as DEG (Cologne, Germany), which is a division of state-owned Kfw Bankengruppe (Frankfurt, Germany), and another 45 million euros from a group of six Syrian banks.

Syria has been under the control of the ruling Baath Party since 1963, and the state has been run using Soviet "command economy" policies. The infrastructure of the state is in poor condition, and the power generated meets only two-thirds of the domestic demand. The current power generation capacity of Syria is 7,000 MW, while domestic demand is 10,000 MW. Damascus often has to undergo power cuts that last up to five hours at a stretch. In a major bid to overhaul the power infrastructure of the nation, the government is trying to attract investments from the private sector. According to Mahmoud Al-Khoshman, the government is making the shift to a private-public partnership because of lack of sufficient funds. It is a move based on necessity. However, the Syrian government is trying to avoid referring to the project as the first power privatization deal after several decades, as it is keen to shed its image of a command economy.

In June 2008, Syria's Public Establishment of Electricity for Generation and Transmission (PEEGT) (Damascus, Syria), under the Ministry of Electricity, awarded India's state-run engineering company Bharat Heavy Electricals Limited (BSE:600103) (BHEL) (New Delhi) with a $594 million turnkey contract to develop a 400-MW thermal power plant at the Tishreen thermal power plant extension in Syria. The project is expected to be completed within 2011. For related news, see November 6, 2009, article - BHEL Secures $445 Million Tishreen Power Plant Expansion Contract in Syria.

In July 2008, the Ministry of Electricity signed an agreement with Syrian-Kuwaiti company Kharafi Cham (Damascus, Syria), whereby the company will build a 750-MW power plant at Jandar near the city of Homs, which is northeast of Damascus. The project was announced as the first power plant in 40 years to be built and operated by the private sector. Kharafi Cham is a joint venture company formed by Cham Holding (Damascus, Syria) and three Kuwaiti companies: Kharafi Group (Kuwait City), Kuwaiti Syrian Holding Company (KUW:KSHC) (Kuwait City), and Privatization Holding Company KSCC (KUW:KPPC) (Kuwait City).

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