Az­zour North One power, wa­ter plant construction com­pleted

Kuwait Times - - LOCAL -

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.

Pri­vate con­sor­tium

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)”.

* To­tal pro­ject cost: $1.7 bil­lion * Power plant: engi­neer­ing, pro­cure­ment and construction (EPC) con­trac­tor: Hyundai Heavy In­dus­tries (HHI) * Wa­ter plant: engi­neer­ing, pro­cure­ment and construction (EPC) con­trac­tor: So­ci­ete In­ter­na­tionale De Des­sale­ment (SIDEM), a sub­sidiary of Ve­o­lia, France

Az­zour North One Pro­ject Time­line:

* March 2011: Re­quest for pro­posal (RFP) is­sued for the Az-Zour North One Plant de­vel­op­ment * March 2012: Pre­ferred bid­der was cho­sen * De­cem­ber 2012: Suc­cess­ful bid­der an­nounced * De­cem­ber 12, 2013: Kuwait’s first PPP RFP process was suc­cess­fully com­pleted, sign­ing cer­e­mony with MEW, and start of construction * Jan­uary 10, 2014: Shamal Az­zour Al-Oula reaches its fi­nan­cial close * March 13, 2015: Key in­ter­faces con­nec­tion with MEW and KOC: * Elec­tric­ity trans­mis­sion fa­cil­i­ties (MEW), * Main fuel con­nec­tion - Gas (KOC), * Backup fuel con­nec­tion - fuel oil (KOC) * May 3, 2015: First megawatt of power was gen­er­ated into the na­tional grid of Kuwait * June 28, 2015: ECOD 1 :1 GTG in SC - 214.3 MW * Au­gust 11, 2015: ECOD 2 :2 GTGs in SC - 440.5 MW (achieved two days early) * Septem­ber 18, 2015: ECOD 3 :3 GTGs in SC - 664.2 MW (achieved ten days early) * November 26, 2016: Construction com­pleted, full com­mer­cial op­er­a­tion starts

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