RIYADH, 29 December 2005 — The Shuaiba Water and Electricity Company (SWEC) has signed an SR8.1 billion contract with a Siemens-led international consortium, making it the biggest independent water and power project (IWPP) worldwide.

The contract was signed on behalf of the Abdullah Abunayyan Group, the developer of the Shuaiba Power Plant, by Mohammed Abunayyan, the chairman of the group, and Klaus Voges, group president, Siemens Power Generation. It will be the fourth high-capacity steam power plant that Siemens PG is constructing in the Kingdom.

This was announced at a press conference here yesterday by Voges. Among those present were Christian Selch, president and CEO, Siemens Ltd. Saudi Arabia, Dietmar Siersdorfer (Sales, Middle East and North Africa), Kim Dae-joong, president, Doosan Heavy Industries & Construction Co. Ltd., Victor van der Mast and Chung Yil-taek, vice presidents of Doosan company.

“Shuaiba is the largest single order that Siemens has posted to date for the Gulf region,” Voges said after the signing ceremony, adding that it would give a boost to Saudization and local industry, which will benefit by way of subcontracts to be signed with the consortium. The company has already employed 25 Saudi women and more men and women would be recruited as the project gets under way.

The Shuaiba plant, to be constructed by the Siemens PG-Doosan Heavy Industries & Construction Co. Ltd, will be located about 110 kilometers south of Jeddah. It will be a state-of-the-art project to be equipped with one of the most sophisticated flue gas treatment systems than can eliminate 95 percent of sulfur dioxide emission — the benchmark set by Saudi Arabia to curb atmospheric pollution.

The Siemens chief said that once the three units of the power plant are commissioned in late 2009, the plant will provide around 900 MW of power to the national grid. Additionally, the desalination plant supplied by Doosan will provide about 880,000 cubic meters of fresh water to Makkah, Jeddah, Taif and Al-Baha.

“Shuaiba is the first independent water and power project in Saudi Arabia, and the first of a total of four planned major projects. The goal of these projects is to increase installed power plant capacity by 4,500 MW and provide additional 2.2 million cubic meters of drinking water daily,” the Siemens chief executive said.

With the Saudi population slated to double to 40 million by 2020, Siemens’ projection shows that the power generation capacity has already doubled in the wake of the escalating oil prices recently.

As Kim Dae-joong, Doosan president explained to Arab News, four water-cum-power plants will come up in the Eastern Province, Shuqaiq, Ras Az Zour and Jubail. They will give a big boost to the ancillary industry in terms of operation and maintenance of the facilities.

Meanwhile, the Shuaiba IWPP project finance syndication launched by Riyad Bank, Arab Bank, ABN Amro and Al-Rajhi Banking and Investment Corporation as designated book runners was well received by the local, regional and international bank markets.

The transaction was oversubscribed about two times with many international banks participating for the first time in a project finance deal in the Kingdom.

In all twenty-three banks submitted commitments, in addition to the five core mandated lead arrangers or CMLAs that were part of the Saudi-Malaysian project development consortium mandated by WEC.

The five CMLA banks are Riyad Bank, Arab Bank, Al-Rajhi Banking and Investment Corporation, Saudi Hollandi Bank and ABN Amro.

Riyad Bank is also the joint financial adviser along with Standard Chartered bank.

Talking to Arab News, Ghazali Inam, vice president of Riyad Bank’s corporate finance department, said the strong interest of the banking community and successful signing of Shuaiba project financing reflects the solid financial, commercial and legal structure of the project, including competitive yield for participating banks.

He mentioned that the transaction is a reflection of international banking community, including export credit agencies’ confidence in Saudi Arabia and strong interest in government’s IWPP scheme. This he said bodes well for the other upcoming IWPP projects, such as Shuqaiq and Marafiq.

The signing of the EPC (engineering, procurement and construction) contract for the project took place in Riyadh yesterday.

The construction of the project’s power and desalination plant is scheduled to commence in January 2006 and will take 3-1/2 years to complete and commence operations.