Alstom, Arabian Bemco to set up joint venture to manufacture power generation equipment for Middle East

December 4, 2013 1:19 pm

Alstom and Arabian Bemco Contracting Co. Ltd have signed an agreement to create a joint venture (JV) company, Alstom Arabia Power Factory Ltd. The Company will establish a world-class manufacturing facility in Saudi Arabia for power generation components, primarily Heat Recovery Steam Generators (HRSGs) which is used in combined cycle and cogeneration applications to increase thermal cycle efficiency and minimise fuel consumption. In the second phase, the partners envision expanding the scope of the factory to other power generation equipment.

The initial investment will be worth over 200 million Saudi Riyals. This operation reflects Alstom’s on-going commitment to localisation within the Kingdom of Saudi Arabia (KSA) and offers strong market opportunities across the Middle East. The factory, to be located in King Abdullah Economic City, North of Jeddah will train and employ hundreds of Saudi nationals to start with.

With more than 750 installed HRSGs globally, Alstom is a world leader in the engineering and supply of HRSGs for all gas turbine types, whilst Arabian Bemco is an experienced turnkey contractor and local manufacturer within Saudi Arabia. The two companies have already successfully worked together, including on the Riyadh PP12 steam-tail project bid, which was secured last year.

The JV will be a limited liability company incorporated under the laws of KSA with a registered office in Jeddah. Both Alstom and Arabian Bemco will take a 50% stake. Following technology transfer, the JV will be the exclusive licensee of Alstom HRSG technology in Saudi Arabia. It will afford Alstom and Bemco a strong local base across the Middle Eastern region, which represents around 25% of the global market. In addition to Saudi market, this facility will also cover key territories such as Iraq, Bahrain, Kuwait, Qatar, Oman, United Arab Emirates, Yemen, Jordan, Syria, Lebanon and Egypt.

Demand for gas-fired power plants is on the rise in the Middle East and Saudi Arabia is also moving towards gas-fired power generation. The joint company would be well equipped to cater to this demand by combining product expertise and technology excellence from Alstom and local presence and logistics offered by Arabian Bemco.

“Having successfully executed some of SEC’s most prestigious power projects in Saudi Arabia including the world’s largest combined cycle power plant, Arabian Bemco is one of the leading Engineering, Procurement and Construction (EPC) contractors in the region. We are rapidly expanding presence in the Middle East and the JV will equip both partners to serve an increasingly important power generation market with technologically advanced and highly efficient equipment,” said Henry M.Sarkissian, Chief Executive Officer, Arabian Bemco.

Philippe Cochet, President of Alstom Thermal Power, said, “The creation of this joint company is another step towards increasing Alstom’s localisation in Saudi Arabia. Working with reputable local partners such as Arabian Bemco is key to our growth strategy in the Middle East. This announcement follows other initiatives that Alstom has undertaken recently such as launching a services workshop and a training programme with SEC to further create employment and develop young talent in this country.”