Saudi ACWA Power sees US$4.5b in local project tenders

Riyadh

SAUDI Arabian utility developer ACWA Power IPO expects to submit tenders for projects this year worth US$4.5 billion in Saudi Arabia and will also target projects in Morocco and the United Arab Emirates, its chief executive said.

ACWA Power CEO Paddy Padmanathan also confirmed the developer of electricity and water projects in the Middle East, Africa and South-east Asia has shortlisted banks to arrange an initial public offering (IPO). The company is looking to sell a 30 per cent stake to investors and list in Riyadh, said banking sources. An IPO is expected by the end of the year.

"We are expecting to see a lot of projects here in Saudi. We are targeting 50 to 60 per cent of the total," Mr Padmanathan said at ACWA Power's headquarters in Riyadh.

Elsewhere, the company expects tenders for around US$2.5 billion worth of projects in Morocco and US$3.5 billion of projects in the United Arab Emirates.

Saudi Arabia wants to diversify its energy mix by using renewables, for example, and by partnering with the private sector. The ministry of energy's government renewable office plans to tender 3,200 megawatt (MW) of solar photovoltaic projects and 800MW of wind projects.

ACWA will take part in the tender for a 400MW wind plant in March, Mr Padmanathan said, and will also tender for the Rabigh 3 desalination plant, which will have a capacity of 600,000 cubic metres and is expected to cost US$800 million to US$900 million. Other projects expected to be tendered by the end of this year or early next year are a cogeneration plant for the Marjan oilfield and the Tanajib seawater plant for Saudi Aramco.

ACWA last week signed a contract to develop Saudi Arabia's first solar PV plant worth around US$300 million. The plant will be built on a build, operate and own model with a 25-year agreement.

As the world's largest oil exporter increases electricity tariffs to market prices, Mr Padhmanathan expects industrial consumers to shift to renewables as prices become more competitive. ACWA is also looking for M&A deals, he added, despite losing out on the chance to buy a number of power plants in the Philippines.

In Egypt, a memorandum of understanding for US$14 billion of power plants has been put on the back-burner as the country prioritises other projects, but Mr Padmanathan sees more renewable projects happening in the country. ACWA Power expects to soon finalise a power purchase agreement with Egyptian authorities for the Dairut gas-fired 2,400MW plant.

Responding to concerns that sharemarket liquidity will be absorbed by Saudi Aramco's forthcoming IPO, Mr Padmanathan said the two companies have different investor bases. "Our business is about stable long-term return. It is very attractive to a particular investor class, people who think about retiring, people who think about generating income steadily in 20 years, insurance, pension funds, family offices, so therefore we are not concerned." REUTERS