Saudi Power Procurement Co. to retender two projects after receiving just one bid

Saudi Power Procurement Co. to retender two projects after receiving just one bid
SPCC expects to issue a new request for proposals to all prequalified bidders by Jan. 20 (Shutterstock)
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Updated 04 January 2023
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Saudi Power Procurement Co. to retender two projects after receiving just one bid

Saudi Power Procurement Co. to retender two projects after receiving just one bid

RIYADH: As part of Saudi Arabia’s intention to restructure its energy sector and introduce financial and organizational reforms, the Saudi Power Procurement Co. plans to retender two independent power projects in the Kingdom. 

SPCC, which was fully nationalized in August 2022 by the Saudi ministries of finance and energy, is responsible for planning and putting forward projects to generate electricity in the Kingdom. 

The company decided to retender the two projects – Taiba and Qassim IPP – each having a 3,600GW capacity because it received a single bid last year, MEED reported. The contract is to develop the Kingdom’s next gas-fired independent power producer project, the first to be procured by the Kingdom since 2016 when it last awarded a similar scheme. 

It expects to issue a new request for proposals to all prequalified bidders by Jan. 20.

The move reflects SPPC’s willingness to respond to developers, contractors and original equipment manufacturers, which have clamored for the tenders to include so-called decarbonization pathways in order for them to justify their participation in the project, MEED report added. 

It added that many companies are constrained to bid for new projects that do not have a decarbonization component because it could delay their compliance with the net-zero carbon emission targets that are usually set by their countries or governments. 

Even though the inclusion of these changes is expected to attract more bidders, it is likely to increase the total cost of implementing these projects compared with previously procured gas-fired capacity. 

This development is expected send a warning signal to other planned gas-fired IPPs in the Gulf Cooperation Council that they will need to consider integrating decarbonization options if they are to avoid the costs and delays associated with retendered contracts. 

The report added that new request for proposal will see the 7,200MW capacity split into four schemes, each with a capacity of 1,800MW, and a provision for carbon capture and sequestration readiness and other potential solutions to address greenhouse gas emissions “when deemed feasible”.