On Saturday 30 November 2013, a consortium led by ACWA Power International (ACWA Power) which includes Samsung C&T, entered into a power purchase agreement (PPA) with the Saudi Electricity Company (SEC) for the development, financing, construction, operation and maintenance of the Rabigh 2 Independent Power Project (R2IPP).
The project, to be developed on a BOO (build, own, operate) basis, will be located in Rabigh, on the western coast of Saudi Arabia, 130 Km north of Jeddah adjacent to the Rabigh 1 IPP and other existing SEC facilities. The Project, the fourth in SEC’s IPP program represents another significant milestone in the Saudi power sector given that this will be the first IPP to utilize combined Cycle Power plant with a gross thermal efficiency of c.58.8 % at Reference Site Conditions at Rabigh. The project company “Al Mourjan For Electricity Production Company” has been established with the winning ACWA Power consortium and SEC owning 50% each.
R2IPP is a greenfield independent power project with a net generation capacity of 2060 MW. The project will utilize Natural Gas as main Fuel and Arabian Super Light (ASL) as backup Fuel and with the application of combined Cycle Power plant in a configuration of three groups, each comprised of two gas turbines of enhanced efficiency, two heat recovery steam generators (“HRSG”) and one triple pressure steam turbine which will substantially reduce the fuel consumption, the impact on sea water temperatures and carbon emissions to the environment. R2IPP comprises 3 identical power blocks, each delivering a net output of 686.5 MW. The R2IPP plant will comply with all applicable environmental laws, guidelines, regulations and standards of the World Bank, IFC and the Saudi Presidency of Meteorology and Environment (“PME”).
The project will deliver net 2060 MW of electricity to SEC under the PPA which has a term of 20 years from the scheduled commercial operations date of June 2017. The winning consortium selected Siemens for the gas turbine generator unit and steam turbine generator unit, and Samsung C&T to engineer procure and construct (“EPC”) the project. Once completed, the plant will be operated by the First National Operation & Maintenance Company (“NOMAC”), a subsidiary of ACWA Power, under a long-term Operations & Maintenance (“O&M”) contract.
The project agreements and finance agreements were all signed Saturday simultaneously.
74% of the total cost of the project of c. SR5.973bn ($1.6bn) is being funded by senior debt with the balance being provided by the shareholders in the form of equity bridge loans. The bank group contributing the senior debt comprises a mixture of international banks; Standard Chartered Bank (“SCB”), KfW-IPEX Bank (“KfW”) and Mizuho Bank (“Mizuho”) and local banks; Banque Saudi Fransi (“BSF”), Al Rajhi Bank (“ARB”), National Commercial Bank (“NCB”), Samba Financial Group (“Samba”) and Al-Inma Bank (“Al-Inma”). Four Saudi banks; BSF, NCB, Bank Al Jazirah and Bank Al Bilad are also providing equity bridge loans to the project.
Mohammad A. Abunayyan, Chairman of ACWA Power, stated: “ACWA Power is proud to be the lead developer of Rabigh 2 IPP not only because it will be the most efficient power plant in the Kingdom and MENA regional as well, but also because we have been able to establish a team of developers, equipment suppliers, EPC Contractor, O&M contractor and international & local lenders who, working together have been able to achieve a competitive tariff for SEC, which in turn will help to deliver value to the economic expansion of the country and at the same time serve the electricity needs of more than 2.5 million people in more than four hundred thousand households.”
The signing of these agreements today highlights a series of significant milestones:
- The fourth IPP launched by SEC.
- The most efficient power plant in the MENA region in general and Saudi Arabia in particular, which will reduce fuel consumption and maximize operational flexibility.
ACWA Power brings the total savings delivered by all of the projects developed by ACWA Power so far, to the Saudi economy and its people, to a total of SR8.656bn. This project led by ACWA Power, the Kingdom’s well established developer and operator of power plants, also continues to validate the thesis that a local developer leading such transactions puts the interests of the home country as its utmost priority; minimizing capital costs and operating expenses without compromising on reliability of power supplies for the duration of the contracted commitments, all the while ensuring fuel efficiency, reducing environmental impact and providing meaningful employment to the citizens of the country.
Wednesday, December 4- 2013 @ 8:24 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.