Azzour North One power and water plant construction completed, starts full commercial operation today

- Kuwait's first PPP project commences 100% commercial operations
- Adds 1,539MW and 107MIGD to the national grid today
- The combined facility of power and water generation represents Kuwait's most efficient source of electricity

Kuwait City, November 29, 2016: Shamal Azzour Al-Oula KSC, the owner and operator of Azzour North One power and water plant, today officially marked completion of the plant’s construction phase and announced the commencement of full commercial operation. The USD1.7 billion facility that started construction in December 2013 is Kuwait's first independently owned power and water facility, and falls under the first phase of the country’s IWPP project. The project was completed on schedule and on budget.

As of today, the project has the capacity to generate 10% of Kuwait’s power requirements at peak capacity (1,539MW) and 20% of water generation (107 million gallons per day). The plant is fueled by a blend of local gas and imported LNG. The combined facility of power and water generation is Kuwait’s cleanest and most efficient source of electricity.

Shamal Azzour Al-Oula KSC is 40% owned by a private consortium comprising ENGIE (formerly GDF SUEZ), Sumitomo Corporation, and A.H. Al Sagar & Brothers. The remaining 60% is owned by the Government of Kuwait, through the Kuwait Investment Authority (KIA: 5%), the Public Institution for Social Security (PIFSS: 5%), and Kuwait Authority for Partnership Projects (KAPP: 50%). The Government of Kuwait is mandated to sell 50% of the total ownership through an Initial Public Offering (IPO) to Kuwaiti citizens after construction is completed. The government will retain 10% stake following the IPO.

The power and treated water produced from the plant will be entirely supplied to the country’s national power and water grid operated by the Kuwait Ministry of Electricity and Water (MEW) under a 40-year long-term Energy Conversion and Water Purchase Agreement (ECWPA). ENGIE and Sumitomo will undertake the operation and maintenance (O&M) of the plant on an equal share basis.

The plant is the first stage of the country’s plan to significantly increase capacity over the coming years, and falls within a larger effort to meet an anticipated peak demand of 25 gigawatts (GW) by 2025. It was awarded under the IWPP law and implemented through a process managed by the Kuwait Authority for Partnership Projects. The Plant is part of an overall IWPP located in the Azzour area. The overall IWPP is expected to be developed over five phases, for a total capacity of 4,800 MW of electricity and approximately 280 MIGD of desalinated water to be tendered over a period of four to six years to meet a projected rapid increase in electricity demand, which is expected to increase at a high rate of 7.6% per annum until 2020 against the backdrop of fast economic growth.

KAAP General Manager Mr. Mutlaq Al Sanea said, “Azzour North One project was our first PPP project to be tendered and the first to be completed. All of us at KAAP are extremely proud of this achievement and the transparent and efficient tendering process it involved. Shamal Azzour KSC is living proof of the benefits of PPP model and how the private sector, international partners, and the State can all work together on delivering major infrastructure projects on schedule and on budget for the benefit of the people.”

Shamal Azzour KSC Chairman Mr. Yousef Al Hajri said, “On behalf our partners, our investors, and everyone working on the project, it gives me great pleasure to announce that as of today Azzour North One is fully operational, with a production capacity of 1,539.2 MW and 107MIGD. The plant is a testament to the country’s vision and the private sector’s capability in materializing the vision. All of us involved in the project are extremely proud of this achievement.”

Shamal Azzour KSC CEO Mr. Andy Biffen said, “I would like to thank MEW, KAAP, our EPC contractors Hyundai Heavy Industries (HHI) and Societe Internationale De Dessalement (SIDEM), General Electric, our staff, our shareholders, and everyone who had role in delivering a project of this magnitude on schedule and on budget; reflecting the skills, efficient organization and expertise of all those involved. Today, as we celebrate the 100% commercial operation of the plant, we look forward to providing the country with the cleanest and most efficient power in the grid, to extending more opportunities for Kuwaitis, and to operating a safe, efficient environment for our employees.”

Shamal Azzour KSC CFO, Mr. Quentin des Cressonnieres said, “Shamal Az Zour achievements of the past three years would not have been possible without the Project Finance in place, and the strong support from our Lenders (NBK, JBIC, NEXI, SMBC, Standard Chartered and BTMU) and our Shareholders (ENGIE, Sumitomo, Al Sagar, KAPP, KIA, PIFSS). We also look forward to start the IPO process of 50% of the Shares to Kuwaiti Citizens in the coming months (Mid 2017)".

Azzour North One power and water plant highlights

● The power plant produces 1,539.2 MW in net contracted power capacity

● The power plant is operated by a combined cycle gas turbine: natural gas as main fuel and gas oil as backup fuel

● The power plant comprises five (5) General Electric GTG 9F-3 turbines generating 225.8 MW each and two (2) General Electric STG D1 turbines generating 251 MW each

● The water desalination plant comprises a multiple-effect distillation (MED) unit capable of producing 107 million imperial gallons per day (MIGD) (the equivalent of 486,400 m3/d) of desalinated water. The water desalination plant’s output represent 20% of Kuwait’s installed water treatment capacity

● The water plant uses MED technology through 10 SIDEM MED units, each generating 10.84 MIGD

Project Achievements:

● Cumulative Man Hours: over 26 Million

● Environmental incidents: None.

● Early power generated after 18.5 months since start of development

● Construction project was completed on schedule and on budget

Project Facts:

● Total project cost: US$1.7 billion

● Power plant: engineering, procurement and construction (EPC) contractor: Hyundai Heavy Industries (HHI)

● Water plant: engineering, procurement and construction (EPC) contractor: Societe Internationale De Dessalement (SIDEM), a subsidiary of Veolia, France

Azzour North One Project Timeline:

● March 2011: Request for proposal (RFP) issued for the Az-Zour North One Plant development

● March 2012: Preferred bidder was chosen

● December 2012: Successful bidder announced

● December 12, 2013: Kuwait’s first PPP RFP process was successfully completed, signing ceremony with MEW, and start of construction

● January 10, 2014: Shamal Azzour Al-Oula reaches its financial close

● March 13, 2015: Key interfaces connection with MEW and KOC:

● Electricity transmission facilities (MEW),

● Main fuel connection - Gas (KOC),

● Backup fuel connection – fuel oil (KOC)

● May 3, 2015: First megawatt of power was generated into the national grid of Kuwait

● June 28, 2015: ECOD 1 :1 GTG in SC – 214.3 MW