Wednesday, Feb 21, 2007
DUBAI (Dow Jones)--Saudi Arabia's Water and Electricity Co., or WEC, will award a $1.87 billion contract for its second independent water and power project, or IWPP, on Feb. 28. to a consortium of Japan's Mitsubishi Corp. (8058.TO), Kuwait's Gulf Investment Corp. and local water utility ACWA Power Projects, a company official said Wednesday.
The project, which consists of a 212,000 cubic meter a day desalination plant and a 850 megawatt power plant, will be located at Shuqaiq on the southwestern coast of Saudi Arabia and will contribute to meeting rising demand for power and water in the country.
The consortium was expected to form a company to operate the project and hold a 60% stake, while WEC would hold 40%, by the end of 2006. The consortium and WEC were to conclude a 20-year power and water purchase agreement, according to a press release last November.
A third IWPP, Ras Al Zour, is in the pre-qualification phase, the official said.
"We have received more than 40 expressions of interest from companies," the official told Dow Jones Newswires.
The request for proposals for the plant, worth upwards of $3 billion, will be issued in June, with a company being chosen in mid-January 2008.
The official said that a fourth IWPP could be launched in mid-June, once interested companies have submitted RFPs for the third project.
WEC is still discussing the location for the fourth plant, but the official said it could be in Yanbu, in the west of the country.
This plant will produce 400,000 cubic meters a day of water. The size of the power plant has not been decided yet, the official said.
Gulf countries facing rapid population growth are liberalizing their power and water sectors to attract regional and international investment to help meet soaring domestic demand.
The kingdom will require 70,000 MW of installed power generation capacity by 2025, almost twice the existing capacity. Demand for desalinated water will rise to 5.5 million cubic meters a day from 3 million cm/d during the same period, according to German consultancy firm Fichtner.
WEC, established in 2003, is a joint venture between Saudi government-owned Saline Water Conversion Corp., which owns the largest desalination plant in the world, and Saudi Electricity Co. (5110.SA), a public company in which the government holds a majority stake.
-By Ayesha Daya, Dow Jones Newswires; +971 4 2279520; ayesha.daya@dowjones.com
(Oliver Klaus in Dubai contributed to this story.)
Copyright (c) 2007 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
21-02-07 1434GMT
