DOHA, (Reuters) - Qatar has chosen U.S. firm AES Energy as its partner in a $700 million independent water and power project (IWPP), a Qatari official said on Wednesday, May 30.
"We have issued the letter of award to AES and plan to sign a formal partnership agreement very soon," said Abdullah Salatt, senior adviser to the minister of energy, industry, electricity and water.
Salatt told Reuters the project is estimated to cost around $700 million.
AES Energy will hold a 55 percent stake in the project, while majority privately-owned Qatar Electricity and Water Company (QEWC) will hold a 25 percent stake. The rest will be held equally by state-run Qatar Petroleum and Kuwait-based Gulf Investment Corporation.
The project is planned to generate 430 megawatt (MW) of electricity from mid-2003, subsequently rising to 750 MW within three years, and produce 40 million gallons a day (mgd) of water.
Output will be purchased by Qatar Electricity and Water Corporation (Kahramaa), a regulatory body set up last July to replace the ministry of electricity and water.
"A 25-year sale and purchase agreement, including the price at which Kahramaa will buy the power and water from the IWPP, has been negotiated and it will be signed along with the partnership agreement," said Salatt who chairs a committee to oversee the affairs of the IWPP. He did not reveal the tariff.
Minister of Energy, Industry, Electricity and Water Abdullah bin Hamad al-Attiyah has said Kahramaa would operate on a commercial basis, eventually abolishing subsidies.
Qataris are exempt from power and water charges, while expatriates and commercial establishments pay a highly subsidised tariff.
The Gulf Arab state, whose power and water consumption has risen 11 percent a year for the past five years, is moving ahead rapidly to privatise the generation and distribution of utilities to save on costs and improve efficiency.
Two years ago, the government handed over the operation and maintenance of its 610-MW Ras Abu Fontas B power-cum-water desalination complex to QEWC, which is 57 percent owned by Qatari investors and 43 percent by the government.
Last week, five smaller generating stations were transferred to QEWC. A committee has been set up to study the terms of transfer of another major power-cum-water desalination station, Ras Abu Fontas A, to QEWC.
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