Two firms win power plant deal

Abu Dhabi has awarded a contract to build a large-scale power plant in the Western Region, helping to secure electricity for its biggest oil refinery.

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Siemens Energy of Germany and South Korea's Daewoo Engineering & Construction have won the contract to build a US$1.5 billion (Dh5.51bn) gas-fired power station in Abu Dhabi.

The 1,600 megawatt plant will be used in part to power an oil refinery in Ruwais, where Abu Dhabi plans to increase capacity by 417,000 barrels per day in the next three years. The extra power will also be used to meet the electricity needs of homes.

By using one plant to meet domestic and industrial power needs, Abu Dhabi Water and Electricity Authority can save on energy production by meeting high demand from one while the other is low, said Bob Bryniak, the chief executive of Golden Sands, the regional utilities consultancy.

"Utilities can take advantage of that. A single customer cannot," Mr Bryniak said. "What the utilities like to do whenever possible is to supply refineries and industry themselves."

The planned power station, scheduled to begin operating by 2014, is the latest in a series of large-scale plants Abu Dhabi is building to meet growing electricity demand, which increases by about 10 per cent a year.

In 1998 the emirate began calling on foreign investors to drive that expansion as part of a privatisation plan. The Shuweihat plant, 260km west of the capital, will be the first of nine privatised projects not to include desalination, which is often coupled with power production in the region. The contract also deepens the business relationship between the UAE and South Korea, which has won a series of large infrastructure deals in GCC countries, including contracts to operate the Shuweihat plant and to build and operate the UAE's first four nuclear power plants.

Conventional power plants in oil-rich countries are attractive to construction firms because contractors are not required to supply fuel, which can be a challenge in other regions, said Young-min Koh, a senior manager for overseas project development at the state-owned Korea Electric Power Company.

"The projects are [safer] in the GCC countries like the UAE or Saudi Arabia," Mr Koh said last month.