OREANDA-NEWS. March 09, 2012. Sumitomo Corporation (President and CEO: Susumu Kato; Head Office: Chuo-ku, Tokyo; hereinafter, "Sumitomo"), together with International Power-GDF SUEZ (CEO: Philip Cox; Head Office: London, United Kingdom; hereinafter "IPR") and Abdullah Hamad Al Sagar and Bros.Co. ("Al-Sagar", hereinafter Sumitomo, IPR and Al-Sagar are collectively referred to as "the Consortium") have received the formal Preferred Bidder Notification letter from Partnerships Technical Bureau ("PTB") for the finalization of the Project Agreements for the development, financing , procurement, construction, insurance, operation and maintenance of the Az Zour North Independent Water & Power Producer project in the State of Kuwait ("Kuwait") which was tendered by PTB.  PTB is the focal point agency of Public Private Partnerships ("PPP") program, in charge of the financial, commercial and technical evaluation of PPP projects.

Once the green light is given, the Consortium will construct a Gas-fired combined cycle power plant with a capacity of at least 1,500MW and desalination plant with a capacity of between 102 to 107 MIGD, which is located in Az Zour North on the Arabian Gulf coast approximately 100 kilometers south of Kuwait city, the capital of Kuwait.  Commercial operation of the new power and desalination plant are scheduled to start in May 2015 and the capacity of the plant will account for about 12% of the installed generation capacity and about 23% of the installed desalination capacity in Kuwait. All generated electricity and water will be purchased by Ministry of Electricity and Water ("MEW") under the 40-year, long-term Energy Conversion and Water Purchase Agreement.  In addition, Sumitomo will establish the operation & maintenance ("O&M") company with IPR and be responsible for the operation and maintenance of the plant.

The peak demand during summer period for electrical power reached around 10,500MW and for water reached around 2 million ton per day in the year 2010 and the demand for electricity and water in Kuwait are forecasted to increase at a rate of 3.5 to 4.5% per year.  In contrast, the installed generation capacity is about 13,000MW and the installed desalination capacity is about 2.1 million ton per day in the year 2010, so stable supply of power and water is very important in Kuwait.  The IWPP Law which was issued in 2010 applies to all electricity and water desalination projects in excess of 500MW implemented under the PPP Law and stipulates that such projects need to be tendered in public auction.  The Az Zour North project is the first phase of development of a complex for power generation and water production and this Az Zour North complex is expected to be developed in 5 phases, and Sumitomo will participate in these projects actively.

The Gulf nations have experienced a sharp growth in electric power and water demand, accompanied by industrialization and the diversification of industry.  To meet with this active demand, a number of IPP/IWPP projects are planned to be launched in a near future.  Sumitomo has focused on the Gulf nations as one of its core markets and established the expert organization in Abu Dhabi, UAE on May 2009 to accelerate not only to participate in the investment but also in O&M activity deeply.  Sumitomo will contribute to stable supply of power and water in Middle East more by utilizing our expertise which is cultivated in all over the world.