Shamal Az-Zour by Sustainable Business Magazine

SHAMAL AZ-ZOUR

CLEAN ELECTRICITY AND DESALINATED WATER FOR KUWAIT

SHAMAL AZ-ZOUR

“WE ARE THE FIRST INDEPENDENT WATER AND POWER PROJECT (IWPP) IN KUWAIT.”

ALL EYES

ON US Andy Biffen, CEO of Shamal Az-Zour, speaks to Sustainable Business Magazine about one of Kuwait’s most historic power and water generation projects.

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Shamal Az-Zour Al-Oula K.S.C. are responsible for a major new energy and water plant in Kuwait. The Az-Zour North development, adjoining the existing Az-Zour South site, will become an important provider of clean electricity and desalinated water to the country in the coming years. It also represents a new era for the country, being one of the biggest major private-public partnership projects to emerge following changes in regulation of power generation in 2008. Once private investment into public amenities was allowed, the Az-Zour North development was initiated by the Government of Kuwait’s Partnerships Technical Bureau – today called Kuwait Authority for Public Partnerships (KAPP) – bringing the skills and capacity of the private sector to bear on Kuwait’s national infrastructure. This was undertaken through an Independent Water and Power Project (IWPP), the first in Kuwait’s history, and tendered out to international bidders. A consortium of three investors won the bid: ENGIE, Sumitomo Corporation, and regional partner Al-Sagar. Between them they own 40% of the shares; the remaining 60% are owned by KAPP, KIA, and PIFSS. The consortium reached financial close on the contract on December 12, 2013, with construction work beginning very soon afterwards. Hyundai Heavy Industries (HHI) and SIDEM, an entity of

Veolia, had already been selected by the consortium as lead EPC contractors at this point: HHI are responsible for design, engineering, and procurement of the power plant, plus all construction activities on the site, with SIDEM bringing their cutting edge water desalination technology. Shamal Az-Zour (AZN1) was established as project owner and is responsible for ultimate delivery of the project under the terms and conditions of the contract between AZN1 and MEW. At the time of writing, the project was in month 30 of construction and approximately 98% complete. Project commercial operation date (PCOD) is expected to be November 26, 2016. GETTING TO THE POINT Az-Zour North has been the result of several major achievements, not least the securing of the project in the first place. Andy Biffen, CEO of Shamal Az-Zour, explains the significance: “We are the first Independent Water and Power Project (IWPP) in Kuwait. All eyes are on us as a private participant – the only private participant – in this sector. People have been watching closely to see how the company will perform going forward. To this end, it has been very good to demonstrate our success to date. The Government here will use that success going forward as a message to try to attract other private investment in Kuwait.” SHAMAL AZ-ZOUR

SHAMAL AZ-ZOUR

AZ-ZOUR NORTH WILL HAVE A TOTAL OF FIVE GAS TURBINES AND TWO STEAM TURBINES ONCE COMPLETED.

The scale of Az-Zour North has been massive, with staff levels peaking at 5000 people and a total of 25 million man hours accumulated to date. Without this intense input and effort, Shamal Az-Zour could not have achieved the important early milestone of generating early power from

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three gas turbine just 18.5 months after financial close. “That was a major achievement for all parties involved and we were pleased to be able to support MEW with power generation during the summer of 2015 and into the first quarter of 2016,” Mr. Biffen adds.

When fully operational, the project will represent 10% of Kuwait Power peak capacity (1,539MW) and 20% of water generation (107 million gallons per days). The project will be fueled from a blend of local gas and imported LNG. The combined power and water generation facility repre-

company’s most efficient multi-effect distillers (MEDs) available to meet the 107 million imperial gallons per day (MIGD) clean water production expected of the plant. Water drafted from the Persian Gulf will pass through a multistage process that utilizes waste thermal energy from the power plant to separate salt from water, consuming less power than comparable water distilling technologies. At full capacity this will account for 20% of Kuwait’s total drinking water needs. “The plant itself was selected on the basis that it would give the best thermal efficiency and would meet all international requirements for environmental emissions,” says Mr. Biffen. “It went hand in hand with the fact that they were trying to bid at the lowest tariff to win the project. The angle taken by the sponsors is they have selected equipment that is proven yet also top tier and cutting edge. It is the best balance of proven equipment and thermal efficiency and complies with international requirements for emissions.” ANOTHER CHALLENGE Collaboration between Shamal Az-Zour and Kuwait’s government entities has been a core factor in overcoming challenges in tak-

ing this project forward. “We have worked with many Kuwaiti departments, particularly MEW, KAPP, and Kuwait Direct Investment Promotion Authority (KDIPA). With 98% of work already completed, the project remains firmly on track for reaching PCOD by the scheduled date of November 2016. Over the coming months it will be the responsibility of various parties representing this project to ensure that things continue to be commissioned and tested smoothly, safely, and efficiently. Once Az-Zour North is fully completed it is the intention of KAPP to sell their 50% holding through a public offering. This, too, will be the first time such a thing has happened. Throughout this process, Shamal Az-Zour will support KAPP with the marketing and publicity required to generate enough interest in this sale process, which will commence in early 2017. There is a 40 year contract between MEW (representing the Government of Kuwait) and Shamal Az-Zour. This will ensure sustainability for the owners and investors as one of the most significant projects in Kuwait’s history comes to fruition. As for Mr. Biffen, having already led a similar IWPP project with Al Hidd in Bahrain, he is looking forward to other, new challenges in the region. c

sents Kuwait’s cleanest and most efficient source of electricity. Throughout these massive achievements, ENGIE and Sumitomo Corporation have been responsible for health and safety and environmental monitoring of operations. Across 25 million man hours and industry records, the project has maintained a good record of personnel and environmental safety. TECH SPEC Az-Zour North will have a total of five gas turbines and two steam turbines once completed, using combined cycle technology to improve efficiency and decrease their environmental footprint. The turbines are F Class models manufactured by General Electric, some of the most advanced and efficient currently available. Meanwhile the water desalination technology brought in by SIDEM are the SHAMAL AZ-ZOUR

Shamal Az Zour Al Oula K.S.C Office Address: 6th Floor, Mazaya Tower 2, Khalid Ibn Al Waleed Street, Block 3. Kuwait City, Kuwait. T: 00 965 22 08 56 53 E-Mail: info@aznoula.com www.aznoula.com

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