BUSINESS OPPORTUNITIES IN

INDEPENDENT WATER & POWER PROJECTS

Omar Al-Ghamdi
President, Water & Electricity Co.
WATER & ELECTRICITY CO.
2
WEC
CONTENTS
1. INTRODUCTION
2. WATER AND POWER DEMAND
3. CHALLENGES
4. WHY PRIVATIZE?
5. PRIVATIZATION IMPLEMENTATION
6. SALIENT FEATURES OF RESOLUTION 5/23
7. PRIVATIZATION
8. DETAILS OF WEC IWPPs
9. PROJECT CONTRACTUAL RELATIONSHIPS
10. PRE-QUALIFIED COMPANIES/CONSORTIUMS FOR SHOAIBA
(PHASE 3) IWPP
11. OPPORTUNITIES
12. CONCLUSION
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INTRODUCTION
Domestic Water Resources
50%
Desalinated Water
50%
Ground Water
4
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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 m
3
/d
Year 2003 : 3,353,068 m
3
/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 m
3
).
INTRODUCTION
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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
8691 3791 8791 3891 8891 3991 3002
Millions 3,353,068 Water Capacity (m
3
/day)
Desalinated 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 m
3
/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 m
3
/day
(66% to be met by desalinated water)

Power Demand : 59,000 MW


WATER AND POWER DEMAND
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15
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25
30
35
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45
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Millions
40 Millions
WATER AND POWER DEMAND
POPULATION
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Thousand MWs
WATER AND POWER DEMAND
POWER
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0
1,000,000
2,000,000
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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
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m
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/d
a
y
Years
WATER AND POWER DEMAND
WATER DEMAND (250 L/P/DAY)
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M
i
l
l
i
o
n


m
3
/
d
a
y

Years
Desal Water Shortage
SWCC Plants Desal Water Export
IWPP Plants Desal Water Export
Desal Water demand & de-commissioning of existing plants
WATER AND POWER DEMAND
DESAL WATER (250 L/DAY/Person)
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Increasing Water demand
(By year 2024, total water demand would be
10 million m
3
/day with a desalination water share
of 6.6 million m
3
/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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PRIVATIZATION
IMPLEMENTATION
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
PRIVATIZATION
IMPLEMENTATION
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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).
PRIVATIZATION
IMPLEMENTATION
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PRIVATIZATION
IMPLEMENTATION
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
E
W
S

Shoaiba
Raz Azzour

Jubail
MW 2500
800,000 m/d
MW 1100
340,000 m/d
MW 650-950
880,000 m/d
Shuqaiq
MW 700
212,000 m/d
DETAILS OF WEC IWPPs
LOCATIONS
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DETAILS OF WEC IWPPs
1. Shoaiba Phase 3 IWPP

Water : 880,000 m/day

Power : 650 900 MW
Fuel : Liquid Fuel (Crude Oil)
Estimated
Capital 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 m/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 IWPPs
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DETAILS OF WEC IWPPs
3. Raz Azzour IWPP

Water : 800,000 m/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 IWPPs
4. Jubail Phase 3 IWPP

Water : 340,000 m/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
Location
RFP Issue 1st Unit Production
1
Shoaiba
(Phase 3)
31-July-2004 1
st
Quarter 2008
2
Shuqaiq
(Phase 2)
1
st
Quarter 2005 3
rd
Quarter 2008
3
Raz Azzour
3
rd
Quarter 2005 4
th
Quarter 2008
4
Jubail
(Phase 3)
1
st
Quarter 2006 3
rd
Quarter 2009
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Government
MOF
SEC
SWCC
Aramco
Project
Company
WEC
Fuel (ECA)
EPC
Contractor
O&M
Contractor
SWCC
WPA
PPA
FSA
PWPA
EPC
Contract
LLA
Agreement
Credit Support
Contract
O&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 Country
1 AES Oasis / Islamic Development Bank Infrastructure Fund USA
2 Al Baraka Investment & Development Co. KSA
3 Al Jomaih Holding Company / Consolidated Contractors Company / RWE GERMAN
4 Ali Bugshan / Tractebel FRANCE
5 Arabian Company for Water & Power Development/ Tenaga Nasional Berhad MALAYSIA
6 International Power Plc / Saudi Oger / Xenel ENGLAND
7 Itochu Corporation JAPAN
8 Mitsui & Company Ltd. JAPAN
9 Mubadala Development Company / Union Water & Electricity Company UAE
10 National Power Company / Sumitomo JAPAN
11 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 plants 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. 2
nd
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 DETAILS
For further information please contact:

Omar A. M. Al-Ghamdi
President
Water & Electricity Co.
P.O. Box. 300091,
Kingdom Center
Riyadh 11372 , Saudi Arabia

Tel : +966 1 211 3362 / 63
Fax : +966 1 211 3313
Email : omar@wec.com.sa ; wec@wec.com.sa
Website : www.wec.com.sa
THANK YOU