A consortium composed of ACWA Power Projects, Gulf Investment Corporation (GIC), and Mitsubishi Corporation entered today into a series of agreements with Water and Electricity Co. (WEC) for the development of the Shuqaiq Independent Water and Power Project (IWPP). The project, to be developed on a BOO (build, own, operate) basis, will be located at Shuqaiq, on the southwestern coast of Saudi Arabia and will substantially increase power and water supplies to the south region. The Project is the second IWPP being developed by WEC and represents a major development in the Saudi water and power sector to help satisfy the increase in demand.

The IWPP was awarded to the consortium following an international competitive tendering process organized by WEC. The process attracted three offers, a reflection of the interest and confidence that international and regional power developers have in the project and the Kingdom of Saudi Arabia.

The project consists of a thermal power plant and a reverse osmosis technology desalination plant together with all support facilities such as fuel unloading platform and water intake and discharge structures. The complex will have a capacity to export 850 MW of power and 212,000 cubic meter per day (47 million imperial gallons per day) of water.

The project will deliver electricity and water to WEC under a twenty-year Power and Water Purchase Agreement (PWPA) commencing on 1 December 2010. The first phase of the project will start in the summer of 2010, with full capacity being achieved in late 2010. The winning consortium selected Mitsubishi Heavy Industries, Ltd. (MHI) as the EPC contractor of the project. The Complex will be operated by The First National Operation & Maintenance Company (NOMAC).

The project is expected to cost circa USD1.9 billion, which will be funded by a mix of equity capital and project finance. Samba Financial Group, Riyadh Bank, Gulf International Bank, Bayern LB and Woori Bank have underwritten the debt financing. A number of regional and international banks expressed interest to participate in the financing, leading to debt oversubscription.

Mr Mohammad Abunayyan, Executive Chairman of ACWA Power Projects stated: “Whilst ACWA Power Projects is proud to be leading this venture and are particularly delighted to partner with GIC and Mitsubishi Corp., we are extremely pleased to have been able to offer a tariff that was significantly lower than the other competing bidders thus delivering significant monetary value over the 20 years to the economy and the people of the Kingdom who will all benefit from competitively priced and reliably delivered water and power supply”

Mr Hisham Al-Razzuqi, CEO of GIC stated: “the Kingdom of Saudi Arabia has successfully attracted local, regional and international private sector investment into the country’s water and power sector. The Kingdom will increase the efficiency of the sector by using up to date technology and good utility practice at a very economical price. It will also promote economic and social development by bringing additional power and water capacity on stream in a timely fashion.” Mr Al-Razzuqi further stated: “GIC is a leading investor in power and water projects and intends to continue to play a major role in these projects in the GCC”

Mr. Yoshiaki Katayama, Senior Vice President of Mitsubishi Corporation stated: “It is our great pleasure and honor to participate in this Shuqaiq project for WEC together with our reliable partners of ACWA and GIC, which is our first IWPP in the Kingdom of Saudi Arabia. Considering our long relationship and experience with Saline Water Conversion Corporation (SWCC) and Saudi Electricity Co. (SEC), we would like to expand our contributions for the Kingdom through this project and the future business opportunities.”