RIYADH, 7 March 2004 — Saudi Arabia is inviting French companies to invest in the Kingdom’s power sector. The sector needs SR200 billion for new power projects over the next 20 years.
Deputy Minister of Water and Electricity Abdullah A. Al-Hussayen inaugurated a Saudi-French seminar on public-private partnership jointly organized by the Ministry of Water and Electricity and the French Embassy in collaboration with the French Foreign Trade Advisors and the Saudi-French Business Council.
Al-Hussayen said power generation in the Kingdom, which stood at 28,000 MW in 2000, was projected to reach 34,000 WM next year and 42,000 MW by 2010.
The funding model could be of the build-operate-transfer (BOT) type for a period of 20 years for the power generation projects and 15 years for transmission projects. At least 20 percent of the capital cost should be funded on an equity basis with the returns on invested shares fixed at around 20 percent.
Giving a breakdown of the investment requirements over a five-year period from 2006-2010, the deputy minister said the Saudi Electricity Company (SEC) would need over SR2.9 billion, with SR1.29 billion required to generate 6,100 MW of electric and SR1.62 billion in 1,090 km transmission lines.
French Ambassador Bernard Poletti said there was good scope for French participation in the Kingdom’s power generation projects in view of the continued demographic growth which was driving the demand for power consumption.
French electric companies could play a major role in the power generation sector, both in terms of technology transfer and manpower training. “Right now negotiations between the two countries in this sector are in progress,” he said. The dialogue was in line with the strategic alliance between the two countries whose foundation was laid during the landmark visit of French President Jacques Chirac to the Kingdom in 1996.
Banque Saudi Fransi has been involved in financing power projects in the Kingdom. On Feb. 26, BSF, as mandated lead manager, successfully closed the second IPP financing in the Kingdom — the $620 million Saudi Aramco Third Party Co-generation project. It will have an aggregate capacity to produce 960 WM of electricity and 2,000 tons per hour of steam.
The plants will be owned and operated by a special purpose project company, Tihama Power Generation Company, sponsored by International Power of the UK (60 percent) and the local business group Saudi Oger (40 percent).
Four energy conversion agreements were signed with Aramco in December last year, each with an initial tenure of 20 years from plant commissioning. The plants will be constructed by the end of 2006. The gas turbines will be supplied by General Electric of the US, while the steam generators are being procured from Hyundai Heavy Industries of South Korea.
