Bids opened on 850 MW Yanbu power plant

Invitations to bid for the estimated $1.5 billion contract include companies from Europe, the United States, South Korea and a local Saudi Arabian company.

The demand for power in Saudi Arabia is rising at an estimated 8 each year, and the country's Electricity and Co-Generation Regulatory Authority plans to increase the power generation capability to 121,000 MW by 2032.

Most of the power generated in Saudi Arabia is supplied by oil-fired power plants, and the new Yanbu plant is no exception. It will be fired by heavy fuel oil, with the ability to use Arab light crude oil as a backup fuel. So great is the Saudi reliance on oil that it uses 320 million barrels of crude oil solely for power generation, representing about 10 of the country's total production.

European companies invited to bid for the construction contract include Siemens AG, Tecnicas Reunidas S.A. and Saipem SpA.

South Korean bidders are believed to include Samsung Engineering, Hanwha Engineering and Construction Corporation, Daelim Industrial Company Limited and Hyundai Heavy Industries Company Limited.

The United States will be represented in the bidding process by the privately owned Bechtel Group Incorporated, while the local Saudi Arabian company Arabian Bemco Contracting Company Limited has been invited to bid.

Bemco already has an impressive track record in Saudi Arabian power projects, winning a $1.8 billion contract from the Saudi Electricity Company to expand the Al-Qurayyah combined-cycle power plant in October last year, and a $3 billion contract, also from Saudi Electric, for the greenfield 3,000-MW Riyadh Power Plant No. 10 in June 2008.

Bidding for the main package closes on November 3 this year. It is understood that three other packages will be offered, each with a different bid closing date.