Alstom and Arabian Bemco Contracting Co. Ltd. have signed an agreement to create a joint venture (JV) company — Alstom Arabia Power Factory Ltd.
Philippe Cochet, president of Alstom Thermal Power, made the announcement on the sidelines of the Saudi Water and Power Forum 2013.
The company will establish a world-class manufacturing facility in Saudi Arabia for power generation components, primarily heat recovery steam generators (HRSGs), which are used in combined cycle and cogeneration applications to increase thermal cycle efficiency and minimize fuel consumption. In the second phase, the partners envision expanding the scope of the factory to other power generation equipment.
The initial investment will be worth over SR240 million. This operation reflects Alstom’s ongoing commitment to localization within the Kingdom and offers strong market opportunities across the Middle East. The factory, to be located in King Abdullah Economic City, north of Jeddah will train and employ hundreds of Saudi nationals to start with.
Saleh H. Alawaji, deputy minister for electricity and chairman of Saudi Electricity Company (SEC), said: “The Saudi government policies encourage partners in power sector by localizing industry, services and creating jobs.”
With more than 750 installed HRSGs globally, Alstom is a world leader in the engineering and supply of HRSGs for all gas turbine types, while Arabian Bemco is an experienced turnkey contractor and local manufacturer within Saudi Arabia.
The two companies have already successfully worked together, including on the Riyadh PP12 steam-tail project bid, which was secured last year.
The JV will be a limited liability company incorporated under the Saudi laws with a registered office in Jeddah. Both Alstom and Arabian Bemco will take a 50 percent stake.
Following technology transfer, the JV will be the exclusive licensee of Alstom HRSG technology in Saudi Arabia. It will afford Alstom and Bemco a strong local base across the Middle East, which represents around 25 percent of the global market. In addition to the Kingdom, this facility will also cover key territories such as Iraq, Bahrain, Kuwait, Qatar, Oman, the UAE, Yemen, Jordan, Syria, Lebanon and Egypt.
Demand for gas-fired power plants is on the rise in the Middle East, and Saudi Arabia is also moving toward gas-fired power generation. The joint company would be well equipped to cater to this demand by combining product expertise and technology excellence from Alstom and local presence and logistics offered by Arabian Bemco.
Henry M. Sarkissian, president and CEO of Arabian Bemco, said: “Having successfully executed some of SEC’s most prestigious power projects in Saudi Arabia, including the world’s largest combined cycle power plant, Arabian Bemco is one of the leading engineering, procurement and construction (EPC) contractors in the region. We are rapidly expanding our presence in the Middle East and the JV will equip both partners to serve an increasingly important power generation market with technologically advanced and highly efficient equipment.”
Cochet said: “The creation of this joint company is another step toward increasing Alstom’s localization in Saudi Arabia. Working with reputable local partners such as Arabian Bemco is key to our growth strategy in the Middle East. This announcement follows other initiatives that Alstom has undertaken recently such as launching a service workshop and a training program with SEC to further create employment and develop young talent in this country.”
He added: “Saudi Arabia continues to be one of the most important markets for Alstom in the Middle East and we are committed to furthering our presence in this market.”
He said: “Localization is at the center of our growth strategy in this market. This is also a direct result of the strong encouragement and drive by SEC leadership, especially Alawaji and Ali bin Saleh Al-Barrak, CEO of SEC, to push us toward localization initiatives and direction.”
He said: “Today we are proud to be taking this strategy one step forward by signing a new partnership with one of the Kingdom’s leading local players — Bemco. Bemco is a prominent and reputable partner in the Kingdom and our partnership will enable Alstom to move ahead with its localization strategy.”
The deal is of benefit to the Kingdom. Not only does it promote local employment but also it enables leading edge technology to be manufactured locally. Alstom is a world leader in building HRSG’s and we will be transferring our expertise and know-how to Bemco, he added.
“We have partnered with SEC extensively on their steam projects including building the flagship Shoaiba project and are now keen to partner in their next phase of expansion and support together with Bemco their gas-fired projects.”
Alstom also inaugurated on Monday its Rabigh Thermal Services workshop.