ACWA Power buys Samsung C&T's 4.99% stake in Hajr Electricity

The share purchase agreement let's ACWA Power buy the remaining 12.51% held by Samsung C&T in the firm

HEPC runs the Qurayyah Independent Power Plant (IPP) in Saudi Arabia.
ACWA Power
HEPC runs the Qurayyah Independent Power Plant (IPP) in Saudi Arabia.

Saudi Arabia-based developer, owner, and operator of power generation and water desalination plants ACWA Power has inked a share purchase agreement with Samsung C&T to acquire 4.99% of its shares in Hajr Electricity Production Company (HEPC).

As part of the agreement, ACWA Power has the option to purchase Samsung C&T’s remaining stake in the firm that runs the Qurayyah Independent Power Plant (IPP) in Saudi Arabia.

Saudi Electricity Company (SEC) owns a 50% stake in HEPC, and the remaining 50% is held by a consortium of ACWA Power; MENA Infrastructure Fund; and Samsung C&T — through a holding company.

ACWA Power owns 22.49% — up from 17.5% after the share purchase; MENA Infrastructure Fund owns 15%; and remaining 12.51% — dropping from 17.5% — is held by Samsung C&T.

Following the share purchase deal, ACWA Power will become the second largest shareholder in the company. The total cost of the project was $2.7bn (SAR10.1bn), with approximately 75% of the financing being secured through long-term project financed debt, and the remaining in the form of equity.

Qurayyah IPP, which has a net capacity of 3,927MW, has the potential to save more than 6,000m3 of carbon emissions annually.

Speaking about the rise in equity, CEO of ACWA Power, Paddy Padmanathan, said: “The increase of equity participation in the Qurayyah IPP project is an indication of ACWA Power’s confidence in the Kingdom’s economy and social prosperity set on a growth trajectory by the steady implementation of the various programs within the framework of the ambitious Saudi Vision 2030.”

Considered as a landmark tariff, the Qurayyah IPP project bid was 15.5% lower than the nearest bidder. This resulted in savings of more than $506.4m (SAR1.9bn) in over 20 years; in addition to savings of more than 160 million cubic feet of natural gas per day.

Meanwhile, chief investment officer of ACWA Power, Rajit Nanda, said that the company’s investment in the Qurayyah IPP project showcased the “crucial role” the private sector plays in supporting the economic transformation of Saudi Arabia.

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