Bahrain and a private consortium have signed an agreement to develop the US$500mn Al Ezzel independent power plant project. The plant is expected to provide at least one third of the kingdom’s power requirements when it becomes operational by 2007.
The project agreement was signed by the Minister of Finance and National Economy, Abdullah Hassan Saif, the Minister of Electricity and Water, Shaikh Abdullah bin Salman Al Khalifa, and the Minister of Oil and Chairman of the Bahrain Petroleum Company, Shaikh Isa bin Ali Al Khalifa.
Tractebel EGI and the Gulf Investment Corporation (GIC) will design, build, own and operate the plant, to be located in Al Hidd. The companies will provide the equity with a number of Bahraini and international banks expected to participate soon in its financing.
“This is a very important project that will help boost Bahrain’s power generation capacity. Under the agreement, the company will be responsible for generating the power and the government will, in turn, buy it,” says Saif, adding, “the pricing for power, and as to how much to charge, will be on the government’s discretion.”
The project consists of a combined cycle gas turbine plant with a capacity of about 1,000MW. Project development will be placed under Al Ezzel Power Company BSC, a newly-registered Bahraini company equally owned by Tractebel and GIC.
As part of the agreement, Al Ezzel Power Company will deliver electricity to the Ministry of Electricity and Water under a 20-year power purchase agreement, to commence from May 2007.
The first phase will deliver 470MW starting April 30, 2006, with full capacity expected to be achieved a year later.
The paid-in capital of US$120mn will be financed by the Tractebel and the GIC. The remaining will be financed through loans from regional and international banks headed by HSBC and Societe Generale. The domestic private sector will finance up to 30% of the ownership of the project.
The project is designed to help Bahrain meet its growing power requirements. The demand in 2003 peaked at 1,539MW, according to the Ministry of Electricity. Saif says that preparatory work for the project has commenced on the site.
“Bahrain has developed a remarkably stable political and social environment. This has attracted our consortium to take part in the project. The bidding process was completed in a record time,” adds Guy Richelle, CEO of Tractebel EGI Middle East.
GIC Chief Executive Hisham Al Razzuqi also says that Bahrain had run a well-organised and “highly successful tendering process.”
“Bahrain received five offers, a reflection of the interest and confidence that international power companies have in the project. The kingdom has successfully created an environment conducive to attracting the private sector to invest,” Al Razzuqi says.
Tractebel EGI is a business division of SUEZ, an international industrial and services group. The company has been present in the region for some 15 years.