RIYADH: State-run Saudi Electricity Company (SEC) signed a contract on Saturday with a consortium led by Korea Electric Power Corp. (KEPCO) to build the 1,200 megawatt Rabigh fuel-oil fired power plant.
Funding for the SR9.4 billion ($2.5 billion) project will be provided by a consortium of banks led by Alinma Bank, which expects to contribute about $500 million, said Abdulmohsen Al-Fares, the bank’s chief executive officer.
Other banks include Bank of China, Calyon, HSBC, National Commercial Bank, Banque Saudi Fransi, Samba Financial Group and Standard Chartered, SEC said in a statement.
The power consortium includes Saudi’s ACWA Power International and will deliver electricity to SEC under a Power Purchase Agreement (PPA) over 20 years. SEC will have 20 percent of the project.
The plant will be built in two phases, the first of which will deliver 600 megawatts by 2012 while the next 600 megawatts will be delivered by 2013.
“This is the first independent electricity project to be implemented by the private sector in Rabigh with a capacity of 1,200 megawatts,” said Water and Electricity Minister Abdullah Al-Hussayen.
He said a similar project would be implemented in Riyadh with a capacity of 2,000 megawatts. He estimated the annual growth of electricity power demand in the Kingdom at a staggering eight percent. “At present Saudi Arabia has the capacity to produce 40,000 megawatt. This means the Kingdom requires only 3,200 megawatts to cope with the increasing annual demand,” the minister said.
Al-Hussayen expected that the Kingdom’s electricity production capacity would increase to 60,000 megawatts by 2020. “This means we need SR30 billion annually to meet the growing energy demand,” he added.
Ali Al-Barrak, CEO of SEC, who signed the contract with Rabigh company, said SEC’s board of directors had agreed to float 30 percent of new electricity projects for private sector investment.
SEC has invited bidders for a 2,000 megawatt power plant project in Riyadh as part of efforts to meet soaring demand. The combined cycle plant project in the Saudi capital will start its first phase of operation by 2012, Amr Aswaha, head of projects for independent power projects (IPP), told Reuters.
Bidding ends in December with a decision expected in March 2010, he added, without giving details.
SEC, the largest Gulf utility by market value, is trying to satisfy a demand for power that has soared sharply in the past two years as many infrastructure projects are underway.
