Sr7 Billion Deals Signed For Water, Power Projects
Sr7 Billion Deals Signed For Water, Power Projects
Arab News
RIYADH - A consortium comprising ACWA Power Projects, Gulf Investment Corporation and Mitsubishi Corporation signed here yesterday a series of agreements with Water and Electricity Co. (WEC) for the setting up of the Shuqaiq Independent Water and Power Project (IWPP) at an estimated cost of SR7 billion ($1.9 billion).
The signing ceremony, at which Minister of Water and Electricity Abdullah Al-Hussayen was present, witnessed a series of agreements concluded by WEC with the participating companies.
Describing it as a landmark project in the water and electricity sector, AI-Hussayen said the project, to be developed on a build-own-operate basis, would be located at Shuqaiq on the Kingdom's southwestern coast. Its location in that region was of strategic importance, since it could cater to the needs of the people down south, where one of the six economic cities would be built.
The project is the second IWPP being developed by WEC. It consists of a thermal power plant and a reverse-osmosis technology desalination plant together with all support facilities, such as a fuel unloading platform and water intake and discharge structures. The complex will have a production capacity of 850 MW of power and 212,000 cubic meters per day of water. The first phase of the project will become operational in early 2010.
The minister said the project would have a multiplier effect on the economy as it will create 17,000 job opportunities, lead to the transfer of technology to the Kingdom, and rev up the pace of growth of the construction sector. A spin-off of the project will be the establishment of the first National Operation and Maintenance Company, which will operate the project.
Financial Group, Riyadh Bank, Gulf International Bank, Bayern LB and Woori Bank have underwritten the debt financing part of the funding.
A number of regional and international banks have expressed interest to participate in the financing, leading to debt oversubscription. Interestingly, there will be an Islamic financing component, reflecting the increasing participation of such a funding mode in developmental projects.
Pointing out that the demand for water and power consumption has been growing annually at the rate of seven percent, the minister said the sector would get a further boost as the Saudi population was projected to reach 37 million by 2025. This would fuel the demand for housing and, by extension, power generation and distribution needs.
The Kingdom is the largest producer of desalinated water in the water in the world with 30 desalination plants in operation producing three million cubic meters of water daily.
This is distributed through a network of pipelines measuring 3,000 km. In view of the population surge, an investment of SR53 billion would be needed in the long term to cope with the development needs. The private sector, including overseas investors, was welcome to participate in these projects, he said.
Tariq Al-Betairy, chairman of Water and Electricity LLC, said three companies had submitted bids for the project, which was picked up by ACWA Projects consortium. The selection process was marked by total transparency, he added.