Khaled Yacoub Oweis
Reuters
DAMASCUS: An Arab-Finnish consortium is well placed to win Syria’s first private power concession and help solve big electricity shortages, a senior executive in the group said on Monday. The Syrian state, which has been controlled by the ruling Baath Party since 1963, is seeking private sector investment after decades of Soviet style policies to overhaul the rundown infrastructure and boost electricity output that falls one third short of demand.
“Syria, out of necessity, not luxury, is moving to private-public partnerships because they don’t have sufficient money to finance infrastructure,” Mahmoud al-Khoshman, chief executive officer of Marafeq, a venture between Syria’s Cham Holding and the Kuwaiti conglomerate Al-Kharafi.
“To the consumer we will ensure one thing – reliability, There will be electricity when they need it,” said Khoshman, referring to the 240 megawatt project in Nassserieh, northeast of the Syrian capital.
Marafeq bid for the project several months ago as a consortium with Finnish engineering company Wartsila, whose role Khoshman said would include a turn key contract for the design, construction and commissioning of the 200 million euro plant.
Electricity Minister Ahmad al-Kayali said Marafeq and Terna Energy of Greece qualified as last stage bidders.
The project is Syria’s first power privatization deal in decades, but officials avoid referring to it as so, with the government struggling to shed the legacy of a command economy that has transformed Syria, a once-open country, into an anomaly among more prosperous neighbors.
Under the 25-year build, own and operate deal, the Syrian government would provide fuel free of charge to run the power plant, buy and distribute the electricity.
Syria at present produces around 7,000 megawatts of electricity, compared with a 10,000 megawatt demand. Power cuts for five hours a day in Damascus are common.
“What is stopping the Syrians primarily is the lack of knowledge about how to structure this project. The process has to go proper,” said Khoshman, adding international banks would not otherwise finance it.
Khoshman, a Jordanian, said Marafeq was seeking 100 million euros ($147.7 million) in loans for the power plant from Europe, including DEG, a division of Germany’s government controlled banking group KfW, and 45 million euros from six Syrian banks.
Syrian businessmen founded Cham Holding, which has a $365 million capital, in 2006 as Syria relaxed restrictions on private investment.
The main player in the group is 40-year-old tycoon Rami Makhlouf, a cousin of President Bashar Assad under specific US sanctions for suspected corruption. Makhlouf denies any wrong doing.
The sanctions, which were first imposed in 2004, have also helped to undermine the ability of Western banks to deal with Syria.
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