A South Korean government entity will provide US$10 billion (Dh36.73bn) in loans for Abu Dhabi's nuclear project, a sum that by itself almost covers the financing targets sketched out by emirate officials. The loans from the Export-Import Bank of Korea (KEXIM) will cover much of the financing Korea Electric Power Corporation (KEPCO), the prime contractor, needs to complete the $20bn contract to build four nuclear power plants by 2020, said Heung-Sik Min, the bank's Dubai representative.
The announcement comes two weeks after a senior Abu Dhabi Government official said the Government would raise debt to cover half the cost of the plants, the largest infrastructure project in the emirate. "The UAE nuclear project will be the bank's first for such a huge amount," Mr Min told Bloomberg. "Once they have chosen the financial advisers, they can outline the financing." KEXIM was considered a key part of KEPCO's consortium when the company was competing for the contract against bids from France and a US-Japanese alliance last year.
Emirates Nuclear Energy Corporation (ENEC), an Abu Dhabi Government-owned company, has said KEPCO's ability to unify component suppliers, a fuel company, an operations company and KEXIM under one umbrella was a major reason it was chosen. KEXIM's involvement in the Middle East has grown in line with the rapid increase in orders won by Korean contractors to build power plants, oil and gas processing plants and heavy industry across the region. It has already issued $9.4bn in loans for Middle East infrastructure projects this year, Mr Min said.
ENEC confirmed last month it had hired Credit Suisse as a financial adviser to the nuclear project. The total financing package would be likely to include a mix of export credit, government bonds and syndicated loans from commercial banks, said the senior government official, who spoke on condition of anonymity. "The Government of Abu Dhabi likes to finance projects with leverage because it likes to benefit from the rigour of banks' analysis," the official said.
ENEC will own the nuclear plants outright but has said it would be likely to create joint-venture companies with KEPCO or other foreign companies for operations and uranium fuel supply. It expects to start construction on the first plant by the end of 2012 and have it in operation less than five years later.
