UAE delays awarding nuclear reactor contract

The Government has delayed awarding the $41bn contract to build the country's first nuclear reactors.

The Government has delayed the awarding of its landmark nuclear power station contract, originally due to take place this week, with all three groups of bidders still in the running, Government sources said yesterday. The US$41 billion (Dh150.4bn) contract to build a fleet of reactors in the UAE was to be awarded on Wednesday, with the field of competing firms expected to have been narrowed from three to two this summer. But the Government decided to keep all three bids in the running and has "slightly" delayed the contract award, according to Government sources.
The delay suggests that the contest for the largest construction contract in UAE history remains a tight race and discounts reports that a winner has already been chosen. "What happened ultimately was some of the bids were so close in some areas, we decided to proceed with all three," a senior government official said. "It will mean a slightly longer period of negotiations." The contract may not be awarded before the end of the month, a diplomatic source close to one of the bidders said. "It'll take a long time because they continue to have three candidates," he said.
Three consortia of firms from France, South Korea, Japan and the US are competing for the contract, one of the largest for years in the nuclear industry. The winner will build and operate a series of nuclear power stations that could generate up to a third of the nation's electricity. The delay comes just weeks before the US Congress is expected to allow the passage of a nuclear co-operation agreement with the UAE, which is considered a crucial element by government officials because it will allow the use of ubiquitous American technology and personnel in the country's nuclear power industry.
The government is evaluating each bid's score on a combination of factors, including technology, cost and deliverability. A French group led by Areva, Electricite de France, GDF Suez and Total is competing against a Japanese-American alliance of Hitachi and General Electric, as well as a Korean group made up of Korea Electric Power, Samsung, Hyundai and the US firm Westinghouse. The contract is expected to be preceded by the approval of a nuclear law by Sheikh Khalifa, President of the UAE, that will formally give the Government's nuclear regulatory body the mandate to licence operators. It will also stipulate severe penalties for the misuse or trade of nuclear materials.
The new law will be the final step in an 18-month process to establish the legal framework of the UAE's nuclear programme. Last month, the country's permanent representative to the International Atomic Energy Agency, Hamad al Kaabi, gave the agency notice of accession, meaning the Government would accept the agency's safety and security standards for nuclear power plants. The next step is to ensure approval by the US congress of the US-UAE nuclear co-operation agreement that would allow the UAE to use American personnel and technology.
The agreement featured in discussions during a visit to Washington last week by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. [e-mail]