6th Turkish Arab Economic Forum
Istanbul, 26/27 April 2011
Saudi Arabian Power & Desalinated Water Sectors
The Role of IWPPs and IPPs
Prepared by:
Presented by: Dr H.E. Dr. Madani Alaki
Chairman of Shuqaiq Water & Electricity Company
1
1. Sector Size and Growth both power &
Desalinated water
2. Challenges & Opportunities
3. Sector Participants till 2004
4. The role of Privatization
5. The clear Success f the Programme
6. Benefits of transparent Competitive
Procurement
7. Much Opportunity in the Future
2
1.1 Sector Size & Growth - Power

Power Generation Capacity today – 43,000MW

It is forecasted that Power demand in KSA would grow at 8% for the
next 10 years requiring an installed capacity of 75,0001 MW in 2020

Growing to over 100 000 MW by 2030
KSA Power Landscape
InStalled Capacity (in MW)
120,000
100,000
104,591
80,000
85,966
73,484
60,000
57,418
40,000
43,968
30,675
20,000
-
21,673
2000
Actual
2005
2010
2015
2020
2025
2030
Projected
3
1.2 Sector size & Growth – Desalinated Water
Desalinated Water Capacity today – 6 million cu m per day
It is forecasted that the need for Desalinated Water will grow to 10 million
cum/day by 2030 (with the expectation that demand management +
Conservation will signifanctly contain the need for new water)
13,000,000
12,000,000
11,000,000
10,000,000
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
Years
2001
0
2000
m3/day
1,000,000
4
2. Challenges & Opportunities
 High annual growth in demand for both power and water;
 Growth in population and the ever growing younger population
segment reaching the stage of needing their own houses and
services (schools, universities, hospitals).
 Rapid growth in the commercial and industrial sectors.
 In the case of electricity, extremely sharp daily and yearly load
curve due to the significant air-conditioning needs
 Replacement of inefficient old generating units in the case of
power plants and several desal units towards the end their
economic life in the case of water.
 All needing to require very high levels of capital investment for both
capacity expansion and refurbishment , upgrading or replacing
existing units.
5
3. Sector Participants – Till year 2004, only 4.
• Saudi Electricity Company - Responsible
for generation, transmission & distribution
of electricity.
Aramco
Saudi
Electricity
Co.
Marafiq
Saline
Water
Conversion
Corp.
• SWCC - Responsible for the production of
desalinated water but it also generates
electricity as it is economical to co-generate
power when oil is used as fuel; SWCC then
sells the power to SEC at factory gate.
• Marafiq – A utility company that is
responsible to provide utility services to the
two industrial cities of Jubail and Yanbu and
thus buys from SEC and SWCC to internally
distribute but also self generates and
produces some dsal water itself.
• ARAMCO – The oil and gas produces Self
generates for its own needs.
6
4.1. Role of Privatization
 In 2004 His Majesty the King and the Custodian of the two Holy Mosques
passed Resolution 523 which established Water and Electricity Co.
(WEC) signaling the Kingdom’s intention to progressively open up the
electricity and water sector to the private sector to own and operate.
 The first step was to start filling the capacity deficiency by instructing
WEC to launch four Independently Financed Water and Power Projects,
where the private sector is given the reasonability of:
• developing, constructing, owning and operating power and desal plants
• at sites provided under a land lease by WEC .
• Using fuel supplied by WEC
• And sell the power and dsal water on 20 year off take contracts
 The other three participants in the sector, SEC, ARAMCO and Marafiq
accepted the logic of outsourcing the services of owning and operating
power and desal plants and have now launched their own programmes.
7
4.2. Typical IWPP /IPP framework
PIF
32%
SEC
8%
Developer
s
60%
Government
MOF
Credit
Support
Shareholders
Agreement
SWCC
WPA
SWCC
PWPA
Project
LLA Company
Contract
EPC
EPC
Contractor
WEC
FSA
Aramco
Fuel (ECA)
O&M
Contract
PPA
SEC
O&M
Contractor
8
5. 1. Success of the Private Public Partnership Programme
• 10 IWPP/IPP projects in
Saudi Arabia already
contracted, 8 of which are
in operation and are
performing according to
plan. 2 plants are under
construction.
• Note Worthy - Financial
Close of Rabigh IPP, the 9th
project Was achieved in
July 2009, becoming the
first Project Finance
transaction with long tenor
debt to achieve financial
close post Lehman Brothers
collapse (during the height
of the financial crisis).
4000
Estimated Total cost (in Million
Under
USD)
Construction
3500
3000
2500
2000
1500
1000
500
0
First 8 IWPP/IPP already fully operational
9
5.2 - 21% of power + 42% of Desal Water + USD 15 Billion
Raising the efficiency of the national economy – A new industry has been
created. Ten companies founded in Saudi Arabia are now delivering:
• 9,350 MW of electricity - 21% of the power generation capacity of the Kingdom
• 2.3 million cum/day. Representing 42% of the Kingdom's desalinated water
production capacity of 5.5 million cubic meters per day.
• One company, ACWA Power, which is involved in 7 out of the 10 privately owned
and operated plants has emerged as a national champion now spreading its
wings outside KSA.
Encourage the investment of private (local and foreign) capital in a
productive sector of the economy
• SAR 56 billion (USD15 billion) of private investments has flowed into this sector.
• Of this SAR 22.5 billion (USD 6 billion) is foreign direct investment.
Most important of all - 21% additional power generation capacity and 42%
desalinated water production capacity has been added at a price
competitive basis all with out the customary delays.
10
6. Much Opportunity in the Future
•
•
30 – 40 % of Future generation is expected to be IPP(BOO) with Long term
power purchase agreements (20years)
SEC plans to add an additional 12,400 MW in the next 6 years through the IPP
framework (SEC keeps moving more projects into the IPP programme)
IPP Project – Pipeline1
NAME OF IPP
PROJECT
CAPACITY
(GW)
Estimated Bid
Year
PROJECT
COMPLETION
2
2011
2014
DHEBA
1.6
2012
2015
SHUQAIQ
1.6
2012
2015
ALOGAIR
2.4
2013
2016
JEDDAH
SOUTH
2.4
2014
2017
RAS ALZOUR
2.4
2016
2019
QURAYYAH
Total
12.4
In addition, IWPP’s are
planning to add
additional capacity of
6,000MW over the next
6-7 years
1. Source : SEC Presentation
11
6th Turkish Arab Economic Forum
Istanbul, 26/27 April 2011
Saudi Arabian Power & Desalinated Water Sectors
The Role of IWPPs and IPPs
Thank You for Your Attention
3 /day Desalinated Water Export
212,000 m
12
Appendix A1 The Value of Competitive Procurement
Shuqaiq IWPP
Developer
Marafiq IWPP
Power
(Halals/
KwH)
Water
(Halals/m3)
Developer
Power
Water
(Halals/K (Halals/m
wH)
3)
ACWA/GIC/MC
10.27
385.59
Suez/ACWA/GIC
5.71
311.25
Marubeni/NBC
12.00
499.00
IP/Sumitomo/Oger
6.99
307.50
Powertek/Jumai
16.32
532.66
Mitsui/KEPCO/NPC
7.50
273.75
In net present value terms the saving between lowest and next
Shuqaiq IWPP
SR. 2.3 Billion
Marafiq IWPP
SR. 1.8 Billion
13
Appendix A2 Value of Competitive Procurement
Rabig IPP
Developer
Qurayyah IPP
Power
(Halals/KwH)
Developer
Power
(Halals/KwH)
ACWA/KEPCO
12.59
ACWA Power/
Samsung/MENA Fund
7.41
GDF Suez/IP
16.56
Marubeni
8.56
Sumitomo/KEPCO
8.62
IP GDF Suez/Al Jomaih
8.75
Powertek/JGC/SaudiOger
9.25
Tenaga/Saudi Bin Laden
9.30
In net present value terms the saving between lowest and next
Rabig IPP
SR. 3.3 Billion
Qurayyah IPP
SR. 1.2 Billion
14