Sunday, Aug 31, 2008

(This story was originally published on Thursday.)

PARIS (Dow Jones)--A power and desalination project in Bahrain which Franco-Belgian utility GdF Suez (GSZ.FR) plans to build, own and operate in consortium will cost around $2 billion to build, Chief Executive Gerard Mestrallet said Thursday.

Mestrallet was speaking during a conference call to discuss the project, which the group unveiled earlier Thursday.

The Al Dur 1 generation and seawater desalination plant will be a greenfield, natural gas-fired installation which will deliver 1,234 megawatts of electricity and 218,000 cubic meters of water a day, GdF Suez said. Completion of the Al Dur 1 plant is scheduled for 2011, the company said.

GdF Suez Energy International and Gulf Investment Corp. Each holds 50% in the bidding consortium.

Mestrallet said around 80% of the investment in the plant will be financed with debt, with the remaining 20% financed with equity and split equally between the companies.

That means an equity investment of around $200 million by GdF Suez, Mestrallet said.

Suez Environnement's (SEV.FR) water unit Degremont will get a EUR150 service deal in the project, Mestrallet said. GdF-Suez has a 35.4% stake in Suez Environnement.

"In the Middle East, GdF Suez will now have a direct equity interest in over 13,000 MW and 2.5 million cubic meters of water a day, consolidating its position of leading private power developer in the Gulf region," GdF Suez said.

As well as noting the Arabian Gulf region's strategic importance as an area of fast-paced economic growth and increasing power and water needs, Mestrallet also alluded to the significance of building up its position in a region so rich in hydrocarbons, now Suez has merged with gas giant Gaz de France.

"The strengthening of GdF Suez's presence after the merger between GdF and Suez evidently takes an even more meaningful dimension given the reserves that this region has," Mestrallet said on the conference call.

The local electricity and water authority will be the sole taker of the new plant's output, as stipulated in a 20-year agreement.

But GdF-Suez will still own its share of the plant after that contract expires and is committed to remaining in the region, Mestrallet said.

Company Web site: www.gdfsuez.com

-By Adam Mitchell, Dow Jones Newswires; +33 1 40171740; adam.mitchell@dowjones.com

(END) Dow Jones Newswires

31-08-08 0417GMT