Saudi ArabiaÔÇÖs Dhuruma Electricity Co. has awarded a $1.6 billion contract for the construction of a new power plant at Dhuruma.
The contract, which has been awarded to South KoreaÔÇÖs Hyundai Heavy Industries Co., part of the giant Hyundai group, is to build a 1,729 megawatt power plant in Dhuruma, 125 kilometres west of Riyadh by March 2013.
Hyundai Heavy Industries will be in charge of design, construction and test-run of the plant. It was picked as a preferred bidder for the project in March this year.
The plant will be gas-powered, the company said.
Saudi Arabia, the Middle EastÔÇÖs biggest economy, plans to increase generating capacity as its population grows and industrial demand for power rises.
The country plans to spend $80 billion on raising its capacity and transmission network in the next decade as demand is predicted to escalate to 65,000 megawatts by 2018.
To meet growing demand for electrical power in the industrial and agricultural sectors of the economy, the Saudi government has replaced the old fragmented system of electrical power generation (provided by numerous small companies) with SCECOsÔÇöSaudi Consolidated Electric CompaniesÔÇöwhich each provide electricity for a whole region within the country.
The Saudi Electricity & Cogeneration Regulatory Authority (ECRA) has embarked upon a comprehensive plan to develop the industry to be more competitive, where supply and demand controls the market process. The restructuring plan was based on international best practices after studying the experiences of other countries.The Dhuruma contract is the South Korea-based companyÔÇÖs biggest in eight months. In October it won a record $2.06 billion order to build processing facilities for Chevron Corp.ÔÇÖs Gorgon project in Australia.
It is thought that South Korean companies may win a record $70 billion in overseas orders this year, helped by demand from the Middle East. Hyundai Heavy Industries said it expects more power contracts in the Middle East due to high oil revenues and the rapid growth of the region's economies and population.
Up to now, Hyundai Heavy Industries has won eight orders worth $10 billion in Middle Eastern countries including Kuwait, Bahrain and United Arab Emirates.
Headquartered in Ulsan, Hyundai Heavy Industries employs 24,400 people.
