Abu Dhabi's $2bn power need

A Shuweihat power plant

What do you do if you're an emirate that has pumped US$1 trillion into improving your country's infrastructure, energy demand is set to triple over the next five years and you want to diversify away from your dependence on oil-funds? Well, if you're Abu Dhabi, you invite firms to proposals to build a 1600 megawatt power plant worth about US$2 billion.

Abdulla Saif al Nuaimi, director of privatisation at the Abu Dhabi Water & Electricity Authority (Adwea) was quoted by Reuters as saying, "We have started the process of prequalification and we are targeting sending the request for proposals (RFPs) early next month."

We expect to finalise selection of the developer by November this year, (make the) financial close by April 2011 and commissioning in summer 2013."

Shuweihat 3

The power project, named Shuweihat 3, is to be the emirate's ninth power project under a privatisation plan launched in 1998, which sees international developers take a stake in independent power schemes. Under the independent power project (IPP) model, foreign investors also get to operate the plant.

The selected international developer would take a 40 percent stake in the plant, with Adwea taking the remaining 60 percent, Nuaimi said. Shuweihat 3 will be Abu Dhabi's first IPP. The previous eight projects are all independent water and power projects (IWPPs). Water desalination was decided not to be included at Shuweihat 3 to save on investment in water pipelines and for technological reasons

Nuaimi said: "Financial close is next year and there is already commitment from some banks that are confident in Abu Dhabi's successful power privatisation programme."

He added, "Last year we secured financing for Shuweihat 2 despite the difficult financial market conditions."

Adwea sealed a US$2.15 billion long term financing deal for its Shuweihat 2 project in October 2009, one of the largest financing deals in the region.

Abu Dhabi's eight IWPPs produce over 12,000 MW of power and 800 million gallons per day of water.

Nuaimi said, "We have attracted about 60 billion dirhams in foreign investments in the power and water sector so far and Shuweihat 3 will raise that amount."

The new power plant is one of several programmes implemented by the UAE to meet an ever increasing electricity demand. In December, the UAE announced it would be implementing a nuclear program when it awarded a deal worth up to US$40 billion, to a South Korean consortium to build and operate four nuclear reactors in the Gulf Arab country.

Abu Dhabi holds most of the UAE's crude reserves and oil revenues have helped it avoid the worst of the global economic slowdown, as well as the debt crisis that has hit neighbouring emirate Dubai.

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