Demand for electricity in Saudi Arabia has grown considerably in the past two years with the commencement of many infrastructure projects, and SEC is looking to satisfy the growing demand this project. Estimates of power requirements in Saudi Arabia suggest a demand of up to 70,000 MW by 2024, more than double the power demand in 2006 of less than 30,000 MW.
At the end of June this year, SEC released the request for proposal for the Riyadh PP11 power project to 10 companies that had pre-qualified. The successful bidder will own 50% of a project company that will build, own and operate the plant. SEC will own the remaining stake of 50% of the project company.
The new plant will be a combined cycle power station fired that uses gas as the main fuel and Arab super light crude oil as a backup.
Among the 10 pre-qualified companies were Korean Electric Power Corporation (KEPCO), Sumitomo Corporation, Tokyo Electric Power Company Incorporated, and General Electric Company. The project company will agree to supply all of the electricity produced from the power station to SEC for a 20-year period under a power purchase agreement.
The first phase of operations is expected to start by 2012.
The new Riyadh power plant is a part of the SEC's independent power projects (IPP) program. Other plants in the program are a new 1,200-MW plant in Rabigh, located 140 kilometers north of Jeddah City in the Western province, and a new 2,000-MW plant in Qurayah in the Eastern province.
SEC recently obtained a 15-year loan of $693.3 million from the state-owned Public Investment Fund specifically to help finance power generation projects. However, financing for the 1,200-MW Rabigh IPP will be funded by a consortium of banks led by Alinma Bank, including Bank of China Limited, Banque Saudi Fransi, Samba Financial Group, and Standard Chartered plc. Alinma Bank expects to contribute $500 million to the $2.53 billion project in Rabigh.
Just recently, SEC signed a contract for the construction of the Rabigh IPP with a consortium led by KEPCO. The consortium includes International Company for Water and Power Projects (Riyadh). As with the Riyadh project, the consortium will be required to supply SEC with electricity from the plant for a period of 20 years under a power purchase agreement.
The Rabigh fuel-oil-powered plant will be constructed in two stages. The first phase will contribute 600 MW by 2012, and the remaining 600 MW will become available the following year.