Operations begin at Azzour electricity and water plant
First independently-owned project to sell output to MEW
The first independently-owned power and water plant in Kuwait, Azzour North One, launched commercial operations yesterday. Azzour North One will generate 10 percent of Kuwait’s power requirements (1,539 MW) and 20 percent of water needs (107 million gallons per day). The KD 519 million ($1.7 billion) project was delayed for years due to political infighting but finally started construction in Dec 2013.
The power and water plant marks the first stage in a lengthy effort by the government to meet the state’s growing power and water needs. It also represents the first successful test case for the implementation of the government’s mega infrastructure development plan and the public-private partnership model. Azzour North One will be fueled by a blend of local gas and imported LNG. In 2015, Kuwait imported 3.1 million metric tons of LNG and has awarded a consortium to build a KD 882 million ($2.9 billion) LNG import and regasification terminal at Azzour.
Falling under the first phase of the Independent Water and Power Project (IWPP), Azzour North One is owned and operated by Shamal Azzour Al-Oula KSC, which is 40 percent owned by a private consortium comprising ENGIE (formerly GDF SUEZ), Sumitomo Corporation, and Kuwait-based AH Al Sagar & Brothers. The remaining 60 percent is owned by the government of Kuwait, through the Kuwait Investment Authority (5 percent), the Public Institution for Social Security (5 percent), and Kuwait Authority for Partnership Projects (50 percent).
The government is mandated to sell 50 percent of the total ownership through an initial public offering (IPO) to Kuwaiti citizens after construction is completed. The government will retain a 10 percent stake following the IPO. All the power and treated water produced from the plant will be bought by the Ministry of Electricity and Water (MEW) under a 40-year long-term deal.
KUWAIT: Shamal Azzour Al-Oula KSC, the owner and operator of Azzour North One power and water plant, yesterday officially marked completion of the plant’s construction phase and announced the commencement of full commercial operation. The $1.7 billion facility that started construction in December 2013 is Kuwait’s first independently owned power and water facility, and falls under the first phase of the country’s IWPP project. The project was completed on schedule and on budget.
As of yesterday, the project has the capacity to generate 10 percent of Kuwait’s power requirements at peak capacity (1,539MW) and 20 percent of water generation (107 million gallons per day). The plant is fueled by a blend of local gas and imported LNG. The combined facility of power and water generation is Kuwait’s cleanest and most efficient source of electricity.
Shamal Azzour Al-Oula KSC is 40 percent owned by a private consortium comprising ENGIE (formerly GDF SUEZ), Sumitomo Corporation, and A H Al-Sagar and Brothers.
The remaining 60 percent is owned by the Government of Kuwait, through the Kuwait Investment Authority (KIA: 5 percent), the Public Institution for Social Security (PIFSS: 5 percent), and Kuwait Authority for Partnership Projects (KAPP: 50 percent). The Government of Kuwait is mandated to sell 50 percent of the total ownership through an Initial Public Offering (IPO) to Kuwaiti citizens after construction is completed. The government will retain 10 percent stake following the IPO.
The power and treated water produced from the plant will be entirely supplied to the country’s national power and water grid operated by the Kuwait Ministry of Electricity and Water (MEW) under a 40year long-term Energy Conversion and Water Purchase Agreement (ECWPA). ENGIE and Sumitomo will undertake the operation and maintenance (OandM) of the plant on an equal share basis.
The plant is the first stage of the country’s plan to significantly increase capacity over the coming years, and falls within a larger effort to meet an anticipated peak demand of 25 gigawatts (GW) by 2025. It was awarded under the IWPP law and implemented through a process managed by the Kuwait Authority for Partnership Projects. The Plant is part of an overall IWPP located in the Azzour area. The overall IWPP is expected to be developed over five phases, for a total capacity of 4,800 MW of electricity and approximately 280 MIGD of desalinated water to be tendered over a period of four to six years to meet a projected rapid increase in electricity demand, which is expected to increase at a high rate of 7.6 percent per annum until 2020 against the backdrop of fast economic growth.
KAAP General Manager Mutlaq Al-Sane said, “Azzour North One project was our first PPP project to be tendered and the first to be completed. All of us at KAAP are extremely proud of this achievement and the transparent and efficient tendering process it involved.
Shamal Azzour KSC is living proof of the benefits of PPP model and how the private sector, international partners, and the State can all work together on delivering major infrastructure projects on schedule and on budget for the benefit of the people.” Shamal Azzour KSC Chairman Yousef Al Hajri said, “On behalf our partners, our investors, and everyone working on the project, it gives me great pleasure to announce that as of yesterday Azzour North One is fully operational, with a production capacity of 1,539.2 MW and 107MIGD.
The plant is a testament to the country’s vision and the private sector’s capability in materializing the vision. All of us involved in the project are extremely proud of this achievement.”
Shamal Azzour KSC CEO Andy Biffen said, “I would like to thank MEW, KAAP, our EPC contractors Hyundai Heavy Industries (HHI) and Societe Internationale De Dessalement (SIDEM), General Electric, our staff, our shareholders, and everyone who had role in delivering a project of this magnitude on schedule and on budget; reflecting the skills, efficient organization and expertise of all those involved. Yesterday, as we celebrate the 100 percent commercial operation of the plant, we look forward to providing the country with the cleanest and most efficient power in the grid, to extending more opportunities for Kuwaitis, and to operating a safe, efficient environment for our employees.”
Shamal Azzour KSC CFO, Quentin des Cressonnieres said, “Shamal Azzour achievements of the past three years would not have been possible without the Project Finance in place, and the strong support from our Lenders (NBK, JBIC, NEXI, SMBC, Standard Chartered and BTMU) and our Shareholders (ENGIE, Sumitomo, Al Sagar, KAPP, KIA, PIFSS). We also look forward to start the IPO process of 50 percent of the Shares to Kuwaiti Citizens in the coming months (Mid 2017)”.
• Kuwait’s first PPP project commences 100 percent commercial operations
• Adds 1,539MW and 107MIGD to the national grid today • The combined facility of power and water generation represents Kuwait’s most efficient source of electricity
KUWAIT: The Azzour North One power and water plant is seen.