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Review of WEC IWPPs in Saudi Arabia

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Review of WEC IWPPs in Saudi Arabia. By. Farrah Imam Andejani. Contracts Manager. Wed 05/07/2008 ... Farrah Imam Andejani. Contracts Manager. Water ... – PowerPoint PPT presentation

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Title: Review of WEC IWPPs in Saudi Arabia


1
WATER ELECTRICITY COMPANY (WEC)
Review of WEC IWPPs in Saudi Arabia By Farrah
Imam Andejani Contracts Manager Wed
05/07/2008 Country Specials IFAT 2008
2
Outline and List of Contents
  • Water Power Demand
  • WEC IWPPs and SEC IPPs
  • Incentives to Developers
  • Key Factors for Successful IWPP
  • Awards
  • Lessons Learned
  • Opportunities and Conclusion
  • WECs Contact Details

3
1. Water Power Demand
4
Water and Power Demand
  • WEC forecasts that demand for power and water
    will increase to 60 GW and 10 million m3/day by
    2025
  • At the same time, existing water / power plants
    built in the 1970s and 1980s will be
    decommissioned
  • Massive investment is required to meet the
    forecasted demand .
  • Government issued necessary law (Supreme Economic
    Councils resolution 5/23) to permit private
    sector participation through Independent Water
    and Power Projects (IWPPs), to be tendered by
    WEC
  • Electricity Co-generation Regulatory Authority
    (ECRA) was also established to support the
    privatization program

5
2. WEC IWPPs and SEC IPPs
6
Water Electricity Co. (WEC)
  • Water Electricity Co. (WEC) was formed, owned
    on a 5050 basis by Saline Water Conversion
    Corporation (SWCC) and Saudi Electricity Company
    (SEC)
  • WEC acts as a single off taker of Power Water
    from IWPPS and IWP and sells 100 of the water
    to SWCC and 100 of power to SEC
  • WEC is the single point of contact for the
    developers and thus avoids difficulties arising
    due to multiplicity of agencies
  • WEC carryout the RFP development , the tendering
    and bidder selection

7
Water Electricity Co. (WEC)
  • WEC initiated by committing to 3 projects,
    suitably spaced, for commitment to privatization
  • WEC arranges fuel and project site for the IWPP
  • Technical conceptual surveys and studies carried
    out for each project
  • Sufficiently extensive offshore and onshore site
    surveys and investigations carried out to enable
    developers to offer lowest prices in scheduled
    time
  • Develops reasonable schedule and IWPP
    implementation program providing sufficient time
    for bid preparation, evaluation and closing (e.g.
    7 months for bid submission)

8
Location of WEC IWPPs
N
E
W
Ras Azzour
S
850-1100 MW 1,000,000 m³/d
Shuaibah
900 MW 880,000 m³/d
Kingdom of Saudi Arabia
Shuaibah Expansion
150,000 m³/d
Shuqaiq
850 MW 212,000 m³/d
9
WECs IW(P)Ps
10
SHUAIBAH IWPP (1ST IWPP in KSA)
  • Water 880,000 m³/day (194 MIGD)
  • Power 900 MW
  • Project Cost US 2,434 Million
  • Developer ACWA / Malakoff / Tenaga Consortium
  • EPC Consortium Siemens Doosan
  • Bid Submission 5th May 2005
  • Financial Close Jan 2006
  • Status of Project Under Construction ( 86
    completed)
  • Initial Commercial Operation Date 05-Feb-2009

11
SHUQAIQ IWPP
  • Water 212,000 m³/day
  • Power 850 MW
  • Project Cost US 1,850 Million
  • Developer ACWA /GIC /Mitsubishi Corporation
    Consortium
  • EPC Consortium MHI
  • Bid Submission 30th July 2006
  • Financial Closing March 2007
  • Project Status Under Construction (26
    completed)
  • Initial Commercial Operation Date 02-May-2010

12
SHUAIBAH EXPANSION IWP
  • Water 150,000 m³/day (33 MIGD)
  • Project Cost US 233,4 Million
  • Developer ACWA / Malakoff / Tenaga Consortium
  • EPC Consortium Doosan Heavy Industries
    Construction Co. Ltd.
  • Bid Submission 2nd Dec 2006
  • Financial Close 26 July 2007
  • Status of Project Under Construction (65
    completed)
  • Initial Commercial Operation Date 29-Jan-2009

13
Ras Azzour IWPP
  • Ras Azzour IWPP will be the biggest desalination
    project in the world, situated on the
    north-eastern coast of Saudi Arabia
  • Water 1,000,000 m³/day
  • Power 850-1100 MW
  • Fuel Arabian Heavy Crude oil (AHC)
  • RFP issued 15th June 2007
  • Bid Submission 2nd June 08
  • Financial Close 15th Jan 2009
  • Initial Commercial Operation Date 15th Feb 2012

14
SEC IPPs
  • Three IPPs are planned, Total 5.2 GW for
    2012-2015 with estimated cost of 8bn USD
  • Rabigh IPP
  • Capacity 1200 MW
  • Fuel HFO
  • Stage 1 by Apr 2012 and PCOD in April 2013
  • Request for Expression of interest (EOIs)
    16-Dec-2007 (45 submittals)
  • Statement of Qualification (SOQ) due date is
    18-Feb-08
  • RFP planned to be issued in March 2008
  • Planned Bid submission date Aug 2008
  • Riyadh Power Plant 11
  • Capacity 2000 MW
  • Fuel Gas
  • Stage 1 by Apr 2013 and PCOD in April 2014
  • Qurayah Power Plant
  • Capacity 2000 MW

15
3. Incentives to Developers
16
Incentives to Developers
  • Project Ownership Structure Developer 60, PIF
    32 and SEC 8 show significant government
    involvement
  • Single off taker for power water
  • Ministry of Finance (MOF) Credit support both for
    monthly and termination payments
  • PWPA under English law
  • Arbitration under UNCITRAL (United Nations
    Commission on International Trade Law) Rules
  • Option for Bidder to conduct an IPO (Initial
    Public Offering) of up to 49 of its shareholding
    and reasonable exit mechanisms available to
    developers

17
Incentives to Developers
  • Developer has freedom to adopt technological
    innovation / improvement (i.e. improvement in
    Performance Ratio, amalgamation of different
    technologies etc.)
  • Projects implemented on a build, own and operate
    (BOO) basis
  • Off taker (WEC) Procures and delivers Fuel
  • Project Site provided at nominal rent
  • Take or Pay Purchase of 100 available Power
    and Water capacities

18
Incentives to Developers
  • Exchange rate inflation risks ( US Producer
    Price Index and Saudi Consumer Price Index)
  • Change of law protection from the bid submission
    date
  • Interest rate risk protection from Bid Submission
    up to PWPA signing
  • Termination due to WEC events of default with
    full compensation

19
4. Key Factors for Successful IWPP
20
Key Factors for Successful IWPP
  • Even before going to the market for 1st Project,
    it was ensured that a robust legal and regulatory
    frame-work was in place
  • Well structured RFP (Request for Proposals) to
    protect the interests of all parties
  • Transparent and well defined tendering
    evaluation process
  • IWPP capacities decided based on the potential
    developer capacity and prevailing market appetite
    in order to ensure a bankable RFP
  • Scheduling based on the review of the concurrent
    projects in the GCC IPP / IWPP market within
    which the Project will be tendered to developers

21
5. Awards
22
SHUAIBAH / WEC Awards
  • WEC feels very proud and contended that its
    efforts were recognised internationally as seen
    by the following awards
  • Power Deal of the Year 2005 by Project Finance
    International (PFI)
  • Power and Water Deal of the Year 2005 by
    Euromoney
  • Joint Winner for Desalination deal of the Year
    2006 by Global Water Intelligence (GWI)
  • WEC was awarded Distinction in the category of
    Water Agency of the Year 2006 by Global Water
    Intelligence (GWI)

23
SHUAIBAH / WEC Awards
24
6. Lessons Learned
25
Lessons Learned
  • Well-defined Prequalification Requirements
    enhances chances of timely closing the deal and
    hence success.
  • Encouraging greater international competition by
    soliciting expression of interest through
    international media and active promotion.
  • Optimum Risk Allocation amongst parties is the
    key element to protect parties interests and
    achieve lowest tariff for water/power.
  • Well-defined scope in the RFP helps in preparing
    responsive bids.
  • Freedom to choose Technology or combination
    enabled lowest tariff.

26
Lessons Learned
  • Privatization proofed quite useful and successful
    strategy in reviving the power and water sector.
  • Reforms and new laws in kingdom enhanced private
    sector participation.
  • well structured project and credit worthy
    sponsors incited Debt Financing in significant
    size.

27
Lessons Learned
  • Take-or-Pay Agreement provides lender with the
    assurance that the project will have a revenue
    source that will generate sufficient cash to
    service debt obligation. This means additional
    protection against revenue deficiencies are
    provided to lenders.
  • Freedom to capitalize the project (Debt/Equity)
    is viewed as additional leverage tool.
  • Cost overrun is become remote, largely due to
    fixed price , turnkey contracts with contingency.

28
7. Opportunities and Conclusion
29
Opportunities and Conclusion
  • There are unprecedented opportunities in water
    desalination and power generation fields brought
    by the privatization and Public Private
    Partnership.
  • We believe that Privatization as adopted in
    Kingdom of Saudi Arabia is extremely successful
    in delivering critically needed water from the
    desalination plants combined with electric power
    generation.

30
8. Contact Details
31
WECs Contact details
  • Farrah Imam Andejani
  • Contracts Manager
  • Water Electricity Co.
  • P.O. Box. 300091,
  • Kingdom Center
  • Riyadh 11372 , Saudi Arabia Tel 966 1
    211 3362 Ext 109 Fax 966 1 211 3313
  • Email farrah_at_wec.com.sa wec_at_wec.com.sa
  • Website www.wec.com.sa

32
THANK YOU
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