Abu Dhabi plans to invite firms in March to submit proposals to build a 1,600 megawatt power plant worth about $2 billion, a government official said on Sunday, as the emirate looks to meet tripling demand by 2020.
Water and electricity demand in Abu Dhabi, one of seven members of the UAE federation, is expected to rise 7 to 8 percent a year over the next five years. Demand is growing quickly as the world's third largest oil exporter builds infrastructure and industry to diversify away from dependence on petrodollars.
Abdulla Saif al Nuaimi, director of privatisation at the Abu Dhabi Water & Electricity Authority (Adwea) said: "We have started the process of prequalification and we are targeting sending the request for proposals (RFPs) early next month."
Speaking to Reuters in an interview, he said: "We expect to finalise selection of the developer by November this year, (make the) financial close by April 2011 and commissioning in summer 2013."
The Shuweihat 3 independent power project (IPP) will be the emirate's ninth power project under a privatisation plan launched in 1998, under which international developers take a stake in the project.
Under the IPP model, foreign investors operate the plant. The UAE has embarked upon a nuclear programme to try to meet spiralling electricity demand. In December, it awarded a deal worth up to $40 billion, one of the largest ever awarded in the Middle East, 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.
Shuweihat 3 will be Abu Dhabi's first IPP. The previous eight projects are all independent water and power projects (IWPPs). Adwea decided not to include water desalination at Shuweihat 3 to save on investment in water pipelines and for technological reasons, Nuaimi said.
The selected international developer would take a 40 percent stake in the plant, with Adwea taking the remaining 60 percent, he said. Financing would be a combination of debt and equity.
Foreign companies such as General Electric Co, Mitsubishi Corp, Suez Tractebel (part of France's Suez Energy International, Hyundai Heavy Industries and International Power plc have all previously shown interest in power contracts in the region.
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 $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."
Plans to build the next IWPP at Taweelah were progressing, he said.
He added: "The Taweelah C project could be our next IWPP."
Abu Dhabi is set to spend about $12 billion on water and electricity projects over the next five years, a government official said in November. (Reuters)