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Sumitimo suspends Saudi power, desalination plans

Posted on: May 30, 2009

Reuters – Friday, May 22

* $6 bln plant no longer designated an independent project

* Shares fall 1.9 pct vs Nikkei’s 1 pct slide

TOKYO, May 22 – Japan’s Sumitomo Corp <8053.T> said it has put on hold its consortium’s plans for a $6 billion power and water desalination plant in Saudi Arabia after the Saudi government said the plant was no longer designated an independent project.

Sumitomo’s consortium had won preferential rights to build and operate the plant, which was to be capable of producing 1 million tonnes of water a day, accounting for a third of the country’s total production capacity.

“We need to see what the plans for the project are before we can make a decision about whether or not we can participate,” said Sumitomo Corp spokesman Katsuhiko Onishi.

“We haven’t given up necessarily. We are just back at square one.”

The consortium, comprising Sumitomo, Malaysian power provider Malakoff Bhd and Saudi Arabia’s Al-Jomaih Automotive Co, outbid a consortium led by Korea Electric Power Corp <015760.KS> and a group comprising Suez Energy and Japanese trading house Marubeni Corp <8002.T>.

The crude-oil fired thermal power plant in Ras Azzour in eastern Saudi Arabia was slated to generate 850 to 1,100 megawatts of electricity when completed in the summer of 2012.

Sumitomo shares fell 1.9 percent to 936 yen, underperforming a 1 percent slide in the benchmark Nikkei average <.N225>.

Sumitomo had planned to start construction in February and to use equipment made by a unit of Fuji Electric Holdings <6504.T> for the plant. Fuji Electric shares also dropped 1.9 percent. (Reporting by Mayumi Negishi and Sachi Izumi; Editing by Edwina Gibbs)


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