AlFanar welcomes Saudi Arabia’s spending on Infra Development
It has just signed a new project with the Saudi Electric Company (SEC), but Alfanar Construction Company is already bracing itself for the years ahead in connection with the kingdom’s planned projects until 2018. According to two of its officials, Alfanar would want to pursue EPC (engineer, procure, construct) projects like substations, transmission lines and power plants in the Gulf.
Engr Sabah Al Mutlag, Vice-Chairman of Alfanar Group, and SEC CEO Engr Ali Saleh Al Barack sign the contract for the Hail-2 Power Plant project as Prince Saud bin Abdulmohsen bin Abdulaziz, Governor of the Hail Region, looks on
“We will be strengthening our investment arm to target power generation and water projects as a developer in the region,” say Abdullah Al Hammad, Division Manager at Alfanar Construction, and the executive manager at the company’s T&D and Power business, Wassim Mallouhi.
The two officials, both engineers, make it clear in an e-mailed interview that Alfanar is more interested in doing these projects, on a build-operate-transfer (BOT) scheme, with the Gulf’s independent power and/or power and water producers.
Alfanar’s current project with SEC covers the reinforcement of power generation for the Hail-2 Power Plant. Valued at $122 million (458m Saudi riyals), the project will add 160MW to the capacity of the existing power plant when the first of its three units becomes operational before the summer of 2011.
The company has five ongoing and/or completed projects across Saudi Arabia this year, including the $95-million expansion of the Sharourah Power Plant. The 2010 projects are worth $252.2 million (945.8m Saudi riyals) while nine projects, amounting to $537.21 million (2.01bn Saudi riyals) are set for delivery by next year.
Besides power generation, Alfanar said in a July statement that it is also an EPC player delivering fast-track projects in various fields, such as power transmission and distribution, building construction and electromechanical construction. Some of its power projects include gas turbine generators (GTG), mostly for brownfield developments, and simple cycle plants, which are useful for supplying power during peak hours as they can be turned on and off within minutes.
The Sharourah Power Plant
Brownfield projects refer to existing industrial and commercial facilities which are abandoned, idled or underused whose expansion is met by constraints emanating from prior work.
Saudi Arabia, whose consumers in the government, commercial and industrial sectors have begun paying 9.6% more for the price of electricity from July 1, announced in April its plan to spend $80 billion, to expand its power industry over the next 10 years.
While the price increase means additional government revenue of $853.3 million per annum, Saudi Arabia needs 3000MW more in its annual power generation capacity. The growing population and rapid economic development are credited for increasing demand for power across the biggest economy in the Gulf.
Here are some excerpts from the e-mailed interview with Al Hammad and Mallouhi:
What exactly does your project for the Hail-2 Power Plant entail?
Alfanar Construction will be the EPC for the Hail project. The scope includes the turnkey supply and installation of a 160MW Simple Cycle Plant. This is a brownfield project that will initially install 2x80MW GTG simple cycle base loaded gas turbines on treated crude fuel oil operation.
How will the increase in the price of electricity in Saudi Arabia impact Alfanar’s business?
An increase of 9.6% means an increase in demand, and additional revenue for the government. As such, government spending on the infrastructure development in this sector will be promising; thus, being a leader in the electrification projects, we find it a positive sign for our business.
Is Saudi Arabia on track to adding the needed 3000MW to its power generation capacity every year?
Yes. In 2009, SEC announced the PP11 and Raz Az Zawr, along with other midsized projects. These constitute more than 4000MW, and similar developments are happening in the transmission and distribution segments.
