(MENAFN- The Peninsula)
By Mohammad Shoeb
DOHA: A solar power company with a capacity of 1000 megawatt will be formed soon. The joint venture between Qatar Electricity and Water Company (QEWC) and Qatar Petroleum (QP) will have an initial capital of about QR1.82bn ($500m).
The company has cleared legal hurdles and has been approved by authorities said a senior official of QEWC Qatar’s main producer of utilities services.
“The project has been decided based on the fact that producing solar power is cheaper than buying gas from international market” Fahad Hamad Al Mohanadi (pictured) Managing Director of QEWC told The Peninsula on the sidelines of the company’s AGM recently.
“We have carried out a detailed study that proved the economic viability of the project. The proposed project has been approved and now we are in the process of establishing the company very soon.”
Once the company is established by a partnership between QEWC (60pc) and QP (40pc) international firms will be invited to compete for the 40 percent stake in a way followed by QEWC for its past projects.
Replying to a question on using alternative forms of energy to produce electricity in Qatar Al Mohannadi said that the option of having a coal-fired plant is a big no. Nuclear power is also not the option because it’s too late and the size of the country is also a constraint. Wind has very little viability. So the only viable renewable source of energy is solar he added.
“I believe by 2019 prices of oil and gas will recover enough to make solar the most viable option. Therefore solar is going to be the backbone of the source of energy in future.”
The QEWC and its foreign investment arm Nebras Power is currently involved in about a dozen local and international projects of various sizes in different countries including the US Turkey Croatia Tunisia Jordan Saudi Arabia and the UAE.
For example the Asfin El Bistan Project in Turkey aims at establishing a number of stations for electricity generation by coal with a capacity of 4500MW in addition to coal mine exploration in Kahramanmaras in Ankara.
Similarly Nebras is also involved in yet another big foreign venture ‘Fadhili project for Power Water and Steam generation’ in neighbouring Saudi Arabia with generation capacity of 1600MW of electricity about 768.8 tonnes of water per hour and 3.19 million pounds of steam per hour.
Asked about the financing of its projects he said the company explored the option of issuing bonds but found that offers by commercial banks are more attractive than issuing bonds. “For smaller projects of less than $500m QEWC will source funds from local banks while for bigger ones such as Umme Al Houl it will go to the international market” said Al Mohannadi.
He said QEWC being a utility producing company will not face difficulties in raising funds on the backdrop of deteriorating credit quality in the region.
“Since the utility service providers face the lowest risks and QEWC has inked long-term supply agreements (including with Kahramaa) so everywhere in the Gulf regardless of the ratings of the country commercial banks find it very attractive” he said.
Commenting on the company’s revenue and profit forecast for 2016 he said: “We are a little conservative about forecasts and put the lowest figures for our assumption but normally we beat that number by 15-20 percent.”
The Peninsula