Sumitomo backs off Ras Azzour desalination bid

A consortium led by Japan’s Sumitomo Corporation has “put on hold” its plans for the Ras Azzour independent water and power project (IWPP) in Saudi Arabia, according to Reuters.

This follows reports that the project, which will have a 1 million m³/d desalination plant, was being taken into the public sector by the government and would probably be tendered as an engineer-procure-construct (EPC) contract by the Saline Water Conversion Corporation (SWCC).

SWCC and the government signed contracts worth 9 billion Riyals (US$ 2.4 billion) on 9 May 2009 for pipelines, pumping stations and other facilities related to the project.

Saudi Arabia’s Water & Electricity Company (WEC) announced at the end of October 2008 that the consortium of Sumitomo Corporation/Aljomaih Automotive Co/Malakoff International was its first-ranked bidder for Ras Azzour IWPP. Earlier this year, however, Malakoff, from Malaysia, pulled out of the consortium and a replacement has not been found.

What this would seem to mean is that even if, as seems likely, the project passes back to the SWCC for EPC tendering, Sumitomo may not be bidding. However, Sumitomo Corp spokesman Katsuhiko Onishi is quoted as saying, “We need to see what the plans for the project are before we can make a decision about whether or not we can participate. We haven’t given up necessarily. We are just back at square one.”

Attention therefore turns to the two bids ranked below Sumitomo’s, by ACWA Power Projects/Kepco and Suez Tractabel/Marubeni Corporation.

The Sumitomo bid was for 10 units using multi-stage flash (MSF) and reverse osmosis and a levelised water cost of SR 4.14 (US$ 1.1) /m³. The Suez bid was based on 20 multi-effect distillation units and the ACWA bid on 11 MSF units. Suez offered the lowest levelised water cost at SR 3.62 (US$ 0.96) /m³, but had a much higher electricity cost.