United Arab Emirates - IPPs Further On The Move in the United Arab Emirates20 Oct 2010 • by Natalie Aster
LONDON - A consortium led by South Korea's Korea Electric Power Corp (KEPCO) and Japan's Sumitomo has been awarded the contract for engineering, construction and procurement of the Shuwaihat 3 electric power plant in Abu Dhabi. The competition of five major global consortia and companies for this project in the light of current global economy supports BMI 's view that the independent power project (IPP) model remains highly attractive for foreign investors, in the United Arab Emirates but also in the Gulf region as a whole.
Shuweihat 3 will be the Abu Dhabi's ninth power project developed and operated under the IPP model, which was originally launched in 1998. Whilst the previous eight projects are all independent water and power projects (IWPPs), water desalination is not included at Shuweihat 3 for financial and technical reasons. The gas-fired power plant has an estimated cost of US$1.5bn and will have a capacity of 1,600MW upon completion in 2013. Thereafter, KEPCO is to operate the plant and sell electricity from the facility for the following 25 years.
International interest for the project has been high. When Abu Dhabi Water and Electricity Authority (ADWEA) had announced the remaining two bidders - the KEPCO/Sumitomo team including Siemens and Daewoo, and the Marubeni consortium including Osaka Gas, Kansai Electric, Hyundai Heavy Industries and GE - at the beginning of October 2010, bids from International Power, Mitsui and GDF Suez had already been dropped. For KEPCO, Shuwaihat 3 is the second large power project in the United Arab Emirates it has been awarded in 2010. The company is also leading the consortium of South Korean companies, which was awarded the contract for the construction of the first nuclear power plant in the UAE earlier this year.
The UAE is a highly attractive location for investors in the power sector beyond the weakness of 2009-2010. BMI is forecasting real GDP growth averaging 3.7% per annum between 2010 and 2014, with the 2010 forecast being for economic growth of 4.8%. At the same time, population is expected to expand from 4.70mn to 5.10mn over the period to 2014, with GDP per capita and power consumption per capita forecast to increase by 22% and 8% respectively. UAE's electricity sector will require at least $8bn in investment, the majority in Abu Dhabi, over the next six to eight years to meet the growing demand, and the government plans to expand the installed capacity by more than 50% during the next decade.
Relevant Infrastructure reports by Business Monitor International :
- Greece Infrastructure Report Q4 2010
- Central America Infrastructure Report Q4 2010
- South Africa Infrastructure Report Q4 2010
- France Infrastructure Report Q4 2010
- Australia Infrastructure Report Q4 2010
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- examines the impact of regulatory changes, GDP growth and the background macroeconomic outlook;
- provides competitive intelligence comparing multinational and national contractors and suppliers by products, sales, market share, investments, projects, partners and expansion strategies.
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