Construction of Israel’s largest privately-owned power plant has gotten under way this week, piloted by Scottish-based construction firm Wood Group GTS at an Eilat Ashkelon Pipeline Co. site in Ashkelon, plant owner Dorad Energy announced today.

The 812-megawatt plant is expected to be completed by 2013, and will run on a co-generation combination of 12 gas turbines produced by General Electric and two steam turbines, Wood Group GTS has confirmed.

Meanwhile, the natural gas to power the plant will be supplied by Egypt’s East Mediterranean Gas company.

Dorad Energy is a jointly owned by Eilat-Ashkelon Infrastructure Services (37.5%), Turkish company Zorlu (25%), Adelcom (18.75%) and U. Dori Engineering Works (18.75%), while Wood Group GTS is a subsidiary of the John Wood Group, an international energy services giant based in Aberdeen, Scotland.

While the entire project will cost Dorad billions of dollars, the company will be paying the Wood Group about $870 million to install the turbines and oversee all the earthworks, electricity and construction, according to a statement from Dorad.

“[Wood Group GTS] views this project as a cornerstone for widescale operations in Israel, and sees a great challenge in taking on such a huge project, which constitutes a breakthrough in the establishment of power stations in Israel,” said Shlomo Cohen, manager of the Wood Group GTS Israel branch, in the statement.

“This is the first project in Israel of the global parent company Wood Group, and Wood Group GTS intends to continue to expand operations here in its areas of expertise.”

“We want to build more projects with other companies,” he later told The Jerusalem Post, noting that the group is already in talks for a few specific projects.

The establishment of such a large-scale power plant, which will make up 8% of Israel’s total installed capacity at completion, is part of a larger effort to generate competition with the Israel Electric Corporation, according to a Dorad spokesperson.

Dorad received its 25-year license for a natural gas plant in January 2003, as part of a government- led initiative to “create private enterprise competition so they can reform the IEC,” the spokesperson explained.

Meanwhile, according to the Electricity Sector Law, the IEC must transmit power generated by the private plant to Dorad customers using its national distribution lines, at a price that the two groups agreed upon a few months ago.

“We have the full cooperation of the IEC,” the spokesperson told the Post.

The IEC has in the past declared that it encourages competition with entrepreneurs and that it continues to cooperate with them.

Dorad is not the only private power supplier to have received a license from the government; the next big project is being developed by Israel Corporation’s OPC subsidiary and will produce approximately 430 megawatts, and a smaller project is owned by Dalia Power Energies, according to the Dorad spokesperson.

Confident that this venture will be profitable, Dorad is receiving loans of over a billion dollars from a consortium of four Israeli banks and has already acquired several “high voltage customers,” – including the Defense Ministry and the Mekorot National Water Company, the spokesperson said.

These customers have quite an incentive to take advantage of Dorad’s alternate power source, the spokesperson added, noting that “whatever [price] the IEC gives them, we can give them 10% less because we produce our electricity more efficiently.”

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