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BUSINESS OPPORTUNITIES INBUSINESS OPPORTUNITIES ININDEPENDENT WATER & POWER PROJECTSINDEPENDENT WATER & POWER PROJECTS
Omar Al-Ghamdi
President, Water & Electricity Co.
WATER & ELECTRICITY CO.WATER & ELECTRICITY CO.WATER & ELECTRICITY CO.WATER & ELECTRICITY CO.
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CONTENTS1. INTRODUCTION2. WATER AND POWER DEMAND3. CHALLENGES4. WHY PRIVATIZE?5. PRIVATIZATION IMPLEMENTATION6. SALIENT FEATURES OF RESOLUTION 5/237. PRIVATIZATION8. DETAILS OF WEC IWPPs9. PROJECT CONTRACTUAL RELATIONSHIPS10. PRE-QUALIFIED COMPANIES/CONSORTIUMS FOR
SHOAIBA (PHASE 3) IWPP11. OPPORTUNITIES12. CONCLUSION
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INTRODUCTION
Domestic Water Resources
50%Desalinated Water
50%Ground Water
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• There is a long history of emphasis on water production by the Government culminating in the establishment of Saline Water Conversion Corporation (SWCC) in 1974.
• Today, SWCC produces around 20% of total world production of desalinated water.
INTRODUCTION
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Water Production Increase In SWCC In Last 30 Years:
No. of present Plants• Kingdom : 30 plants at 15 locations• West Coast : 24 plants at 12 locations• East Coast : 6 plants at 3 locations
Water Production Capacity Growth• Year 1973 : 21,000 m3/d• Year 2003 : 3,353,068 m3/d
SWCC also has major water transmission systems (some 3000 km pipelines in length including large pumping stations) and water storage tanks (capacity almost 9 million m3).
INTRODUCTION
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1968 1973 1978 1983 1988 1993 2003
Millions 3,353,068Water Capacity (m3(day/Desalinated Water Production Since 1968Desalinated Water Production Since 1968
INTRODUCTION
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WATER AND POWER DEMAND
The phenomenal growth in water and electricity demands is shown below for the year 2003 and year 2024.
Year 2003• Population : 23.4 millions
(increase of 3% on year 2002)• Water : 6 millions m3/day
(demand increasing by 3% annually, 50% being met by desalinated
water)• Power : 29,000 MW
(demand increasing by 4% annually)
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Year 2024
• Population : 40 millions
• Water Demand : 10 millions m3/day(66% to be met by desalinated water)
• Power Demand : 59,000 MW
WATER AND POWER DEMAND
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0
5
10
15
20
25
30
35
40
45 Millions
40 Millions
WATER AND POWER DEMANDPOPULATION
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0
10
20
30
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60Thousand MWs
WATER AND POWER DEMANDPOWER
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0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
11,000,000
12,000,000
13,000,000
2000
2001
2002
2003
2004
2005
2006
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2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
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2023
2024
m3/ d
ay
Years
WATER AND POWER DEMANDWATER DEMAND (250 L/P/DAY)
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0
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3
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2000
2001
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2011
2012
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2015
2016
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2018
2019
2020
2021
2022
2023
2024
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Millio
n m
3 /da
y
Years
Desal Water Shortage
SWCC Plants Desal Water Export
IWPP Plants Desal Water Export
Desal Water demand & de-commissioning of existing plantsDesal Water demand & de-commissioning of existing plants
WATER AND POWER DEMANDDESAL WATER (250 L/DAY/Person)
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• Increasing Water demand
(By year 2024, total water demand would be
10 million m3/day with a desalination water share of 6.6 million m3/day)
• De-commissioning of existing plants in near future
• Huge investment requirement
(Saudi Riyal 23,000 million at the initial stage)
CHALLENGES
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WHY PRIVATIZE?
• Phenomenal water and power demands entail massive investment – a burden on Governmental resources.
• Low water and electricity tariff
• Stimulate private sector investment and its effective participation in national economy
• Expanding the citizens scope of participation in productive assets
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• Encourage national and foreign capital investment in the Kingdom
• Increase job opportunities
• To make available the Governmental re-sources to other services (health, education, …..)
WHY PRIVATIZE?
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PRIVATIZATIONIMPLEMENTATION
• The Kingdom has initiated several steps to make investment attractive and a reasonable return for private sector.
• There is tremendous opportunity for private sector to participate in the IWPP Projects .
• Private investor is assured of Total commitment by the Government and a fair, credible environment.
• Enabling rules and regulations have been formulated.
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A separate Ministry of Water created in July 2001 (electricity sector incorporated later for it to become MWE)
MWE Responsibilities include
• To establish guidelines for the private sector to
invest in water & electricity infrastructure
• To develop a general sector master plan
• Formulation of enabling rules and regulations
PRIVATIZATIONIMPLEMENTATION
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All Saudi regional electricity companies integrated into a single entity – Saudi Electricity Company (SEC) in the year 2000
The supreme economic council identified 20 sectors
for privatization, those include Desalination, Water
Distribution, Railways, Airlines……
Establishment of Electricity & Co-generation
Regulatory Authority (ECRA).
PRIVATIZATIONIMPLEMENTATION
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PRIVATIZATIONIMPLEMENTATION
The Supreme Economic Council passed
Resolution 5/23 to establish a frame work for
participation of the private sector in water
desalination and power projects.
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Salient Features of Resolution 5/23
Four projects were initially selected and it contemplates additional projects.
Ownership in the project companies:• Government (PIF) - 32%• Saudi Electricity Company (SEC) - 8%• Developers - 60%
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Salient Features of Resolution 5/23
Actual distribution for the unit prices of water and electricity without any cross-subsidy
The projects to be implemented on a build, own and operate (BOO) basis
Utilize the Energy Conversion Agreement (ECA) model to provide fuel to the projects companies
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Salient Features of Resolution 5/23
The Government will provide the offtaker company with the necessary credit support.
The state shall allocate the land sites for these projects.
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BRIEF DESCRIPTION OF WATER & ELECTRICITY CO. (WEC)
• WEC is a limited liability company owned on a 50:50 basis by SWCC and SEC.
• Single Off taker of power and water capacity and output from the IWPPs.
• Supply the Projects with the fuel requirements.
• WEC will monitor power, quality of water and efficiency of fuel conversion.
• WEC will sell the water to SWCC and power to SEC.
PRIVATIZATION
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Under this initiative, the First Group of Four IWPP projects were selected:
Shoaiba Phase 3
Shuqaiq Phase 2
Raz Azzour
Jubail Phase 3
With an investment potential of about Saudi Riyals 23,000 millions
PRIVATIZATION
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° N
EW
S
Shoaiba
Raz AzzourJubail
MW 2500 800,000 m³/d
MW 1100 340,000 m³/d
MW 650-950 880,000 m³/d
ShuqaiqMW 700
212,000 m³/d
DETAILS OF WEC IWPPsDETAILS OF WEC IWPPsLOCATIONSLOCATIONS
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DETAILS OF WEC IWPPsDETAILS OF WEC IWPPs
1. Shoaiba Phase 3 IWPP
Water : 880,000 m³/day
Power : 650 – 900 MW
Fuel : Liquid Fuel (Crude Oil)
EstimatedCapital Cost : SR 6,000 Million
(total SR 23,000 Millions for 4 initial projects)
RFP Issued : 31-Jul-2004
Bid Submission : 08-Jan-2005
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2. Shuqaiq Phase 2 IWPP
Water : 212,000 m³/day
Power : 700 MW
Fuel : Liquid Fuel (Crude Oil)
Estimated Capital Cost : SR 3,800 Million
(total SR 23,000 Millions for 4 initial projects)
DETAILS OF WEC IWPPsDETAILS OF WEC IWPPs
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DETAILS OF WEC IWPPsDETAILS OF WEC IWPPs
3. Raz Azzour IWPP
Water : 800,000 m³/day
Power : 2,500 MW
Fuel : Natural Gas
Estimated Capital Cost : SR 9,000 Million
(total SR 23,000 Millions for 4 initial projects)
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DETAILS OF WEC IWPPsDETAILS OF WEC IWPPs
4. Jubail Phase 3 IWPP
Water : 340,000 m³/day
Power : 1,100 MW
Fuel : Natural Gas
Estimated Capital Cost : SR 4,200 Million
(total SR 23,000 Millions for 4 initial projects)
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DETAILS OF WEC IWPPs
IMPLEMENTATION PROGRAM
No.Plant
LocationRFP Issue 1st Unit Production
1Shoaiba
) Phase 3( 31-July-2004 1st Quarter 2008
2Shuqaiq
) Phase 2( 1st Quarter 2005 3rd Quarter 2008
3Raz Azzour
3rd Quarter 2005 4th Quarter 2008
4Jubail
)Phase 3( 1st Quarter 2006 3rd Quarter 2009
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GovernmentMOF
SEC
SWCC AramcoProject
Company WECFuel (ECA)
EPCContractor O&MContractor
SWCC
WPA
PPA
FSAPWPA
EPC Contract
LLA
Agreement
Credit Support
ContractO&M
Shareholders’
Developers
60%PIF
32%SEC
8%
PROJECT CONTRACTUAL RELATIONSHIPS
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PRE-QUALIFIED COMPANIES/CONSORTIUMS
FOR SHOAIBA (PHASE 3) IWPP
S. No. Company Country1 AES Oasis / Islamic Development Bank Infrastructure Fund USA2 Al Baraka Investment & Development Co. KSA3 Al Jomaih Holding Company / Consolidated Contractors Company / RWE GERMAN4 Ali Bugshan / Tractebel FRANCE5 Arabian Company for Water & Power Development/ Tenaga Nasional Berhad MALAYSIA6 International Power Plc / Saudi Oger / Xenel ENGLAND7 Itochu Corporation JAPAN8 Mitsui & Company Ltd. JAPAN9 Mubadala Development Company / Union Water & Electricity Company UAE
10 National Power Company / Sumitomo JAPAN11 Power & Integrated Projects Company / SNC Lavalin CANADA
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OPPORTUNITIES
There are unprecedented and enormous opportunities in water desalination (and power generation) fields for:
• Developer
• Financing / investment
• Consulting
• Design & Engineering
• Construction including Civil Works
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• Operation and Maintenance
• Maintenance Services
• Material & Equipment Supply
OPPORTUNITIES
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• We consider that there is a further unique and very significant incentive for the developers in these IWPPs. The developers are not bound by the precise and detailed Tender Specification of the client.
• These IWPPs have performance based functional specification and the developer is free to adopt technological innovation / improvement (i.e. improvement in Performance Ratio, amalgamation of different technologies etc.)
OPPORTUNITIES
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• We believe that this approach offered to developers will yield substantial improvement in plant’s capital cost, performance and efficiency to yield very competitive prices.
OPPORTUNITIES
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OPPORTUNITIES
• SWCC shall build water transmission systems with a total pipelines length of 1,560 km for transmission of the four IWPPs as follows:
a. Shoaiba – Jeddah, Makkah and Taif
b. Shuqaiq – Abha and Jizan
c. Raz Azzour – Riyadh
d. Jubail – Dammam
with an approximate total cost of 12.8 Billion Saudi Riyals
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OPPORTUNITIES
SWCC has already tendered the water transmission system for Shoaiba Phase 3, on 15-Sep-2004. The bid submission date is 31-Jan-2005. This water transmission system consists of:
a. Interconnection between Shoaiba 2 and Shoaiba 3
b. Water transmission system to Jeddah
c. Water transmission system to Mina
d. 2nd Water transmission system to Jeddah
e. Water transmission to Makkah and Taif
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These 4 IWPPs will bring unprecedented opportunities for Developers, Financing / Investment, Construction / Civil Works and Supply of Equipment & Materials and Services.
CONCLUSION
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CONTACT DETAILSFor further information please contact:
Omar A. M. Al-GhamdiPresident
Water & Electricity Co.
P.O. Box. 300091,
Kingdom Center
Riyadh – 11372 , Saudi Arabia
Tel : +966 1 211 3362 / 63Fax : +966 1 211 3313
Email : [email protected] ; [email protected]
Website : www.wec.com.sa
THANK YOU
