Saudi Electricity Co. (SEC) will likely delay the planned expansion of its Jeddah South power plant, but is still expected to start tendering for a plant near Riyadh by the end of the year, said industry sources.
The utility is trying to keep up with rampant growth in power demand even as lower oil revenues constrain government spending on infrastructure projects.
The fuel to be used in any new plant is also an issue given Saudi Arabia wants to prioritize exports of crude oil by cutting domestic liquid burning and using natural gas instead.
Jeddah South’s expansion had been due to be funded at state level, but the Riyadh scheme is earmarked as an independent power producer (IPP) project, meaning private sector developers would shoulder the financing burden. 
SEC did not respond to an e-mailed request for comment.
Jeddah South, for which the first phase started in May, would help meet growing electricity demand in the western region, particularly from the holy cities of Makkah and Medina.
SEC in April first invited companies to bid to build the extension to the plant, which aims to nearly double its capabilities by adding as much as 1,400 MW of capacity, but the date to submit technical bids has been extended twice.
The current bid deadline is Sept. 25, but this will likely be extended further, said the sources.
“Officially SEC did not put (the plan) on hold, it just keeps extending it,” said one of the sources.
Many Gulf companies typically avoid formally suspending or canceling a project due to a resultant loss of prestige. Instead, deadlines are repeatedly pushed back until interest wanes, or conditions change to make the scheme viable once more.
Two of the sources said the extension of the bidding was because fuel allocations had not yet been agreed. The first phase of the Jeddah South plant was oil fired.
Saudi Arabia burns a significant amount of crude in power generation, particularly during peak summer months, so the kingdom wants to substitute this for natural gas to ensure more oil can be exported — important when Saudi Arabia is facing another budget shortfall in 2016.
However, despite prioritizing gas for power generation, supplies in Saudi Arabia are stretched, constraining expansion.
A new plant in Riyadh is still expected to go ahead.
Known as PP15, it will be SEC’s largest plant, with a capacity of more than 5,000 MW. 
The company is expected to invite expressions of interest from interested developers toward the end of this year, sources said.

Source: Arab News