Whereas 2010 was a banner year for GDF SUEZ, winning three out of the four tendered greenfield independent power projects in the Middle East, 2011 will be a transformative one with the full integration of International Power.

“We didn’t expect 2010 to go so well,” says Karel Breda, head of acquisitions, investments and financial advisory for Middle East and North Africa, GDF SUEZ. “Winning one out of three or one out of four projects would be considered successful, so we are extremely happy to win three out of four.”

“We have been seen us a regional office focusing on development, but which has become a real company looking at de­velop­ment, operation and management of assets that is constantly looking to exploit synergies,” adds Breda.

In late 2009 and early 2010, the year looked as though it might be marked by the breakthrough of new or less well-established lead developers following the success of Sembcorp on the Salalah IWPP in Oman and ACWA with its Rabigh IPP success. Oman’s Barka 3 and Sohar 2 IPP tenders attracted a record eight serious bidders. However grantors preferred the technical and financing expertise, and all round competitiveness of the old-stager GDF SUEZ.

During 2010, GDF SUEZ-led consortia won the 1,730MW PP11 project in Saudi, which reached financial close 22 June, and won both the Barka 3 and Sohar 2 IPPs in Oman (744MW each), which closed concurrently on 16 September. The Shuweihat 3 IPP in Abu Dhabi was the one greenfield project that got away and was awarded to a Sumitomo and Kepco consortium.

For PP11, many of the same technical and financing group from GDF SUEZ’s successful 2009 Al Dur IWPP financing in Bahrain came together again, with Hyundai Heavy Industries the EPC contractor and turbines supplied by GE. US Ex-Im, EDC, Credit Agricole, Standard Chartered, Societe Generale, KfW, CIC, Banque Saudi Fransi and sponsors’ legal adviser Milbank also migrated from Al Dur to PP11.

For the Barka 3 and Sohar 2 IPPs in Oman, GDF SUEZ again joined up with its now common financial co-sponsor, Japanese firm Sojitz, but with a different technical solution using Siemens and GS Engineering as the turbine supplier and EPC contractor respectively.

The Barka 3 and Sohar 2 awards were marked by some con­troversy, as a rival bidder thought that GDF SUEZ had contravened Oman’s maximum 25% developer concentration rule. How­ever, the Omani regulator AER held in favour of GDF SUEZ. Given the concentration rule, GDF SUEZ is illegible from bidding on the Sur IPP, and following the IP merger may have to make divestments to remain active in the greenfield IPP and IWPP market in the future. It has come up against this issue before: as a condition of winning Barka 2 in 2006 GDF SUEZ was required to sell its 32.81% stake in UPC Manah IPP, which it did in 2009 to MENA Infrastructure Fund.

However, Breda plays down the impact of the IP merger on concentration con­cerns for grantors: “If you look at our market share across various countries and consider that we only own 20 or 40% of a given project, that is, we own pro rata capacity of around 200 to 400MW in each project, and compare that to the whole market our ownership is limited. Another aspect is that the market moves very fast. So while we didn’t bid for the 1,500MW Sur project, after Sur our share goes down dramatically.”

In terms of financing future projects Breda expects ECAs to continue to be important, and he does not expect to see JBIC’s importance diminishing. It is note­worthy that the last time GDF SUEZ tap­ped JBIC was in the remodelled Shuweihat 2 IWPP financing, in a period when JBIC financings were expected to dominate.

“We are seeing more and more banks coming back to the market, although it is not a dramatic increase,” says Breda.

The Korean EPC contactors are expect­ed to remain very competitive in the next few years, and although Chinese EPC contractors are expected to become more visible they will not be mainstream in the short term, muses Breda.