KHOBAR, Saudi Arabia (Reuters) - Saudi-based Acwa Power aims to acquire one or two bundles of generation assets from Saudi Electricity (SEC), its managing director said on Monday, as the privately-owned firm expects to become a major investor in its home market.
“We expect the request for proposals to be out in mid-2018 if SEC is serious about privatizing the first bundle,” Thamer al-Sharhan told Reuters in an interview.
Awarding contracts will take time, he said unless the energy ministry expedites the process within power producer SEC.
Acwa Power which says it is the second biggest developer in the Middle East behind Engie expects bigger market share in its home market Saudi Arabia which aims to privatize not just SEC but also the Saline Water Conversion Corp (SWCC).
Acwa Power operates power and water plants around the world.
The Saudi government has long supported SEC by giving it soft loans and cheap fuel, through Saudi Aramco.
The government is raising electricity tariffs to reflect the actual costs of producing energy and reduce waste.
“Our resources are bigger here. We consider the SEC assets as a good opportunity for us, we will be fierce competitors,” he said, added the sale is drawing the attention of international investors.
SEC’s plans are split into creating four generation bundles with a total capacity of 60,000 MW with an asset value of 100 billion riyals ($26.6 billion).
“We aspire to have at least one (15,000 MW) or two bundles.”
Asked if Acwa Power will team up with an international or local company for the bidding, Sharhan said the terms of the tender remain unclear.
One of the issues is the price, Sharhan said: “If the bundle price is high, the tariff becomes higher, there must be balance between the assets’ value and the value of the tariffs… we are waiting for more clarity from SEC.”
Acwa Power is bidding for renewable projects in Saudi Arabia, which plans to diversify its energy mix.
“I think investments in Saudi will take a big part of our investments, we’re talking about huge numbers,” he said.
On top of the SEC assets, Acwa Power targets to win a good number of projects that will be offered for sale between now and until 2020.
“If you look at the power sector there are around 60,000 MW of brownfield projects and 13,450 MW in greenfield projects including renewable in the pipeline to 2020.”
To maintain its growth spree, Acwa Power plans to launch an initial public offering, which its CEO said will probably happen late next year.
Editing by Saeed Azhar and Keith Weir