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.