A consortium led by ACWA Power International (ACWA Power), and including Samsung C&T and MENA Fund, entered on Wednesday 21 September 2011 into a series of agreements with Saudi Electricity Company (SEC) for the development of the Qurayyah Independent Power Project (IPP). The project, to be developed on a BOO (build, own, operate) basis, will be located at Qurayyah, on the eastern coast of Saudi Arabia, adjacent to existing SEC facilities. It will substantially increase power supplies to the Saudi power grid. The Project, the third and largest IPP of its kind, is being developed by SEC represents a milestone in the Saudi power sector to help satisfy the rapidly increasing power demand. The project company “Hajr for Electricity Production Company” has been established with the winning consortium and SEC owning 50% each.

Qurayyah IPP is a Greenfield Independent Power Project with a net generation capacity of 3927 MW. The design production capacity will make it the largest IPP combined cycle gas-fired power plant in the world once completed. It will also have some of the highest efficiency systems of its kind exceeding 52% fuel efficiency. Qurayyah IPP comprises 6 identical groups of equipment, each delivering a net output of 654.5 MW. Each group comprises 2 Gas Turbines (GTS), 2 Heat Recovery Steam Generators (HRSG) and 1 steam turbine. The Qurayyah IPP Plant is designed and will be constructed to comply with all applicable environmental laws, guidelines, regulations and standards set up by World Bank, IFC and Saudi Presidency of Meteorology and Environment (PME).

 The project will deliver 3927 MW of electricity to SEC under a 20 year Power Purchase Agreement (PPA) commencing on 30 June 2014.  The winning consortium selected Siemens of Germany to provide all major equipment and electrical systems, and Samsung C&T of Korea to Engineer, Procure and Construct the project as the EPC contractor to deliver 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 Operation & Maintenance contract, with Siemens providing parts and services for the gas turbines under a Long-Term Service Agreement (LTSA) with NOMAC. All relevant project agreements are being signed today.

The total cost of the project is SAR 10.69 billion (USD 2.85 billion), with 77% funded in the form of debt, split equally between USD and SAR. The USD facilities will include tranches funded or covered by three export credit agencies; US ExIm, Eulerhermes and Kexim. The international bank group providing funds are HSBC, KfW, Standard Chartered and SMBC. The local bank group is Banque Saudi Fransi, National Commercial Bank, Samba and SABB.

Mr. Mohammad Abunayyan, Chairman of ACWA Power stated: “ACWA Power is proud to be the lead developer of Qurayyah IPP not  only because it will be the world’s largest combined cycle IPP, but also because we have been able to establish a team of developers, equipment supplier, EPC Contractor, O&M Contractor and debt facility providers who, working together have been able to achieve a 15.5% lower tariff than those of the competing next bidder, thus delivering more than SAR 1.9 billion of savings over 20 years to the economy and the people of the Kingdom.”.

The signing of these agreements today highlights a series of significant milestones: 

• The third IPP launched by SEC and the largest gas fired IPP in the world.
• Qurayyah IPP will use the latest technology to increase the efficiency of fuel utilization and maximize operational flexibility.
• Most important of all; even before construction has started, the scrupulously transparent competent procurement process used by SEC has already delivered a savings of SAR 1.9 billion; the net present value difference between the lowest and second lowest tariff of the tender process.

The tariff difference of 21% between the 4000MW tariff and the second lowest tendered tariff for this Qurayyah IPP brings such savings delivered to the Government and the people of Kingdom on all the IPP and IWPP projects ACWA Power is involved with in Saudi Arabia to a total of SAR 7.5 Billion. This validates the thesis that a local developer leading such transactions puts the interests of his home country as its utmost priority; minimizing capital expenses and operating expenses while ensuring reliability of power supplies for entire duration of the contracted commitments, ensuring fuel efficiency, environmental impact mitigation and meaningful employment creation and sustenance for the citizens of the country.

ACWA Power International (“ACWA Power”) the leading developer and operator of power generation and desalinated water production plants in the GCC region announced today the execution of its inaugural corporate credit facility structured on Murabaha basis (“Facility”). The Facility is sized at up to US$300 million. ACWA Power has initially accepted total commitments of US$ 210 million from four international banks; Standard Chartered Bank (Bookrunner & MLA), Citi (Bookrunner & MLA), Bank of America Merrill Lynch (MLA), and Mizuho Corporate Bank (MLA). Standard Chartered acted as co-ordinator for the facility. ACWA Power envisions increasing the total commitments to the full US$ 300 million before the year end for which it is already in discussions with two additional banks.

The signing of this Facility is achievement of yet another milestone for ACWA Power. In addition to being the maiden medium term murabaha facility at the corporate level, the fact that it is secured by its own balance sheet without any shareholder credit supports is a testament to the confidence in ACWA Power’s capability, capacity and credit standing.

“ACWA Power is highly regarded among financing institutions in the Kingdom of Saudi Arabia and our natural preference should have been to raise this Facility from our Saudi relationship banks. However, we chose to raise the Facility from international banks mainly to consolidate our core banking relationships outside the Kingdom of Saudi Arabia as well. Also, we believe that the establishment of this murabaha facility has enabled the international banking community to better understand our business model and support our strategic vision” said Mr. Rajit Nanda, Chief Finance Officer of ACWA Power.

Celebrating the timing of concluding this transaction, Paddy Padmanathan, President and CEO of ACWA Power commented that “Coincidentally, the month of June has been historic, as we not only raised our first corporate club Facility, but also signed the share purchase agreement for the acquisition of a portfolio of power assets in Jordan in addition to being nominated the first ranked bidder for Qurayyah IPP in KSA. The combined impact of these two power plant capacity additions has contributed to increasing our portfolio capacity by another 50%”

The Facility would mainly be used to fund Greenfield and Brownfield projects beyond Saudi Arabia.

His Royal Highness Prince Mohammad Bin Nasser Bin Abdulaziz Al Saud the Governor of Jizan visited Shuqaiq Water and Electricity Company on Thursday 13/1/2011. His Royal Highness's visit started with a tour of the Shuqaiq Water and Electricity Plant and he was briefed on the course of work and the achievements of the Company since its inception.

Accompanying HRH in the visit were H. E. Dr. Madani A. Alagi, the Chairman of Shuqaiq Water and Electricity Company (SqWEC) and H.E. Fehied F. Al Shareef, Governor of the Saline Water Conversion Corporation. The visit included a reception, a welcome speech delivered by H.E. Dr. Madani Alagi and a presentation on the Plant.
H.E. Dr. Madani Alagi, the Chairman of Shuqaiq Water and Electricity Company, expressed his deep thanks and appreciation to His Royal Highness for honoring the company with his visit to the plant.

His Royal Highness' tour of the plant is a reflection of the government's keen attention to the achievements of its citizens. H.E. Dr. Madani Alagi said in his speech, "This project, where around 7 thousand staff members worked to accomplish it within 25 million hours without any occupational accidents affecting the workflow is the first project in Saudi Arabia to be completed 70 days ahead of schedule."

The overall production capacity of the project is 212 thousand cubic meters of desalinated water daily and 850 MW/h which is exported to Jizan and Asir regions.

Shuqaiq Water & Electricity Company was established under the Royal Decree No. 45 issued in 1st of Safar 1428H to satisfy the need for water and electricity in Jizan and Aseer regions.

The Saudi legal reforms set up the general framework for one of the leading privatization programs in the country to allow investors to develop independent water and power projects (IWPPs). The Project is based on BOO (Build, Own & Operate) basis. It is the third IWPP project in the Kingdom tendered by the Water and Electricity Company which was established based on the Supreme Economic Council decision number 5 / 23 of the year of 1423H. The Supreme Economic Council decision regulates the framework for private sector participation in this type of project.

Shuqaiq Water & Electricity Company, which owns the Shuqaiq plant, is considered as a great example of the success of the Public Private Partnership in establishing vital and attractive projects. The list of shareholders includes the Public Investment Fund (32%), the Saudi Electricity Company (8%). The remaining 60% is owned by the Gulf Investment Company, Mitsubishi Company and the International Company for Water & Power Projects (ACWA Power International).

ACWA Power International is the lead developer of this project here construction commenced in March 2007. This is ACWA Power's fourth I(W)PP among the seven projects it has developed in Saudi Arabia. Once all seven projects are completed they will produce 2.4 million cubic meters per day of desalinated water and 6500 MW/h of electricity throughout the Kingdom.

The committee supervising the ACWA Power Research Chair for Water and Power met to discuss the applied fields of research and agree on the person directing the chair, in preparation for the chair launch activities.

Mr. Mohammad Abunayyan, Chairman of ACWA Power Projects (APP), had signed agreement with His Excellency Dr. Abdullah Al-Othman, Rector of King Saud University (KSU), to establish and sponsor a chair focused on research in water and power, two strategic commodities in Saudi Arabia.

The supervising committee's meeting was attended by representatives from APP and KSU's College of Engineering. Both sides have agreed on the following action points: Firstly, development of membranes used in reverse osmosis. Secondly, development of anti-scaling chemicals used in thermal desalination plant. Thirdly, selection of an internationally-renowned researcher--to be announced at a later date--to direct the chair. Fourthly, launching of Chair activities by mid-November, allowing for sufficient preparation time.

ACWA Power Projects corporate social responsibility focuses on sustainable development sponsoring programs and initiatives such as Wafeer, an initiative launched by Tamkeen designed to reduce the consumption of water in industry. Wafeer was launched with the backing of the Saudi Ministry of Water and Electricity, itself an advocate of reduction of consumption.

ACWA Power Projects is an owner and developer of infrastructure assets delivering water and power to cater for the rapidly increasing demand fueled by social and economic growth of nations. ACWA Power Project is an investor in Shuaibah IWPP and its expansion, Rabigh IWSPP, Shuqaiq IWPP, Marafiq IWPP, and Barge IWP, all of which are multibillion-dollar projects currently under construction. While each of these six projects is in a various stage of construction and shall achieve commercial operation between 2008 and 2010, once completed, they will produce a total output of 4,850 MW of power and 2.23 million m3/day of desalinated water.