MGES Power

completed

IFC is considering to provide a loan to and invest up to USD250 million in Mass Global Energy Sulaymaniyah Ltd (“MGES”, or the “Company”), an entity established for ownership and operation of the 1,000 MW Sulaymaniyah Gas Power Station (“SGPS”) located at the Chamchamal area, about 60 km from Sulaymaniyah in the Kurdish Region of Iraq (“KRI”). The owner of MGES, Mass Energy Global Holding Ltd (“MEGH” or the “Sponsor”), is the leading independent power producer in Iraq, owning and operating three gas-fired independent power plants (“IPPs”) in KRI with combined operational capacity of 3,500 MW (1,500 MW Erbil IPP, 1,000 MW Dohuk IPP, and 1,000 MW SGPS). Erbil IPP is a 1,500 MW Combined Cycle Gas Turbine (“CCGT”) power plant whereas Dohuk and SGPS IPPs are currently operating as 1,000 MW Open Cycle Gas Turbine “OCGT” power plants. SGPS 1,000 MW OCGT power plant consists of eight GE Frame 9E gas turbines (125 MW per gas turbine, except for gas turbine No. 4 which is GE Frame 9F) and they started operation in phases between 2009 and 2012. Natural gas is the primary fuel, with fuel oil as the secondary fuel when needed such as when gas pressure is low from the gas pipeline. Fuel supply to SGPS is the responsibility of the Kurdistan Region Government (“KRG”). Natural gas is supplied from a 60 km gas pipeline operated by Pearl Petroleum and connecting Khor Mor Gas Field to SGPS. This pipeline further extends to Erbil IPP (the total length of the pipeline from the gas field to Erbil IPP is 180 km). SGPS receives gas from this pipeline through a less than 1 km connecting gas pipeline. Fuel oil is provided by road tankers. Fuel oil is received at the unloading facility and stored at fuel oil untreated tanks. Untreated fuel oil is treated and sent to fuel oil treated tanks. Raw water is currently being supplied from two SGPS wells located about 12 km from SGPS and is being transported to site by truck. A new water pipeline is being constructed to eliminate this truck traffic. In addition, a water pipeline is being constructed to bring water to site from the Zab River, about 30 km away. This river water will be delivered to SGPS and other industrial water users and the pipeline will be owned by MEGH. Electricity is transmitted to the KRG grid through 132 kV transmission lines. SGPS was developed as a Build, Own and Operate model under a long term power purchase agreement with the KRG Ministry of Electricity (“MoE”). SGPS is converting this existing 1,000 MW OCGT power plant to a more energy efficient CCGT power plant by adding eight Heat Recovery Stream Generators and two Steam Turbine Generators (250 MW each), bringing the total generation capacity to 1,500 MW with significantly improved electricity generating efficiency (around 34% efficiency at OCGT operation, and around 55% efficiency after CCGT conversion, on gross and Lower Heating Value basis). ENKA, a Turkish company, is the Engineering, Procurement and Construction (“EPC”) contractor for the conversion. The conversion work from OCGT to CCGT started in July 2013, and is expected to be completed in 2016. The conversion includes an installment of two Air Cooled Condensers (ACCs) as a cooling system for the CCGT operation. The CCGT conversion will not require expansion of the existing gas pipeline connection. Electricity transmission from the CCGT operation will be through the existing 132 kV transmission lines. KRG MoE plans to construct a new 400 kV transmission line system connecting various power plants, including the project site. The EPC scope of work includes installation of a 400 kV switchyard within the existing SGPS site. The length and the route of the new 400 kV transmission line is still to be determined. This is not considered an Associated Facility under Performance Standard (PS) 1, as it is not required in order to link the project to the grid. The conversion of the SGPS from OCGT to CCGT is being conducted within the existing SGPS site, and therefore, no additional land acquisition is required. The SGPS site was selected and provided to MGES by MoE prior to the start of the SGPS OCGT construction in 2007. Land acquisition for the 63.5 ha site, which is located in an agricultural area, was taken care of by the KRG and there are no pending land compensation claims. The closest residential areas are about 3 km from the SGPS site.