A South Korean consortium has beaten French, US and Japanese competition to win a $20.4bn contract for developing a civilian nuclear programme for the United Arab Emirates – one of the world’s largest nuclear tenders on offer.
The Korean group of companies includes Korea Electric Power Corporation (Kepco), Hyundai Engineering and Construction, Samsung and Doosan Heavy Industries.
The other bidders in the year-long process included a consortium of French companies – Areva, Total and GDF Suez – which had initially been touted as the front runner, and a third consortium of US and Japanese companies, including General Electric and Hitachi.
The UAE is hoping to become the first Arab Gulf state to develop a civilian nuclear programme to help meet soaring demand for power, and the contract involves the design and construction of four 1,400 megawatt units, as well as assistance with their operations.
Under the agreement the Korean investors will have an equity interest in the project. Kepco is owned by the South Korean government and is the world’s third largest nuclear energy businesses, according to a statement.
Kepco and Doosan shares both climbed 15 per cent on Monday while HEC and Samsung C&T rose 13 per cent.
Mohamed al-Hammadi, chief executive of the Emirates Nuclear Energy Corporation said: “We were impressed with the Kepco team’s world-class safety performance, and its demonstrated ability to meet the UAE program goals.
“Additionally, the Kepco team dedicated a highly experienced team to our project and has shown a serious commitment to transferring the knowledge gained from Korea’s 30 years of successful nuclear industry operation into the UAE program.”
The UAE’s nuclear programme, led and funded by Abu Dhabi, the wealthy capital, is considered by Washington to be a model for others in the region to follow as the UAE has pledged to forgo any domestic enrichment or reprocessing – technologies that can lead to nuclear weapons capability.
Numerous other Middle Eastern states have signalled their interests in developing civilian nuclear power plants, partly to meet future power demand as populations swell and economies expand, but also partly in response to Iran’s nuclear ambitions.
However, the UAE, which is a close US ally, is the first nation in the region to move ahead with concrete plans.
The UAE hopes the first of its nuclear units will begin producing electricity to its grid in 2017, with the other three being completed in 2020.
In spite of being the world’s third largest oil exporter and home to the world’s fifth largest proven natural gas reserves, the UAE is already a net importer of gas to fuel industries and power stations.
UAE officials have estimated that national annual peak demand for electricity is likely to rise to more than 40,000MW by 2020, reflecting a cumulative annual growth of about 9 per cent.
Abu Dhabi, which is driving the UAE’s nuclear programme, is home to about 95 per cent of the nation’s hydrocarbons resources. It has amassed significant financial reserves that allowed it to emerge relatively unscathed from the global economic crisis.
In contrast with neighbouring Dubai, the UAE’s debt-burdened business hub, Abu Dhabi is continuing to forge ahead with a highly ambitious development programme.