UAE's nuclear future takes a step forward

Korean contractor plans to announce more than US$10bn of subcontracts as part of plans to build four nuclear reactors in Abu Dhabi.

KEPCO is a major player in South Korea's nuclear industry and its expertise would help in Abu Dhabi's plans to build four reactors.

The Korea Electric Power Company (KEPCO) plans to announce more than US$10 billion (Dh36.73bn) of construction and engineering subcontracts in the next two months as part of plans to build four nuclear reactors in Abu Dhabi, a senior executive said. They will be the first major awards after KEPCO won a $20.4bn master contract in December to develop the Gulf's first nuclear power reactors. It beat bids from French companies and a US-Japanese consortium to provide the reactors, which are to be completed between 2017 and 2020 on an unidentified coastal zone in the emirate.
"We are negotiating with bidders now," said Byun Jun-yeon, KEPCO's executive vice president for overseas business. "The value of the package of contracts will be more than half of the total project cost." KEPCO's winning consortium included Samsung C and T, and Hyundai Engineering and Construction of South Korea. Westinghouse of the US, Toshiba of Japan and Doosan Heavy Industries and Construction are all in line for significant subcontractor packages.
KEPCO would operate and maintain the reactors, Mr Byun said. "We have our own maintenance in-house and operations, so we don't need any outside service companies." But there are numerous opportunities for other companies. Mr Byun said three quarters of the value of the nuclear deal, or $15bn, would be outsourced to subcontractors for critical work and equipment such as instrumentation and components, steam generators, turbines and piping over the entire lifespan of the project. Up to 200 contracts could be awarded, he said.
A large proportion of the work is expected to go to small and medium-size businesses, a plan that was a major focus of the Korea-Abu Dhabi Business Forum held yesterday, featuring more than 400 representatives of Korean and local companies. The event was sponsored by the Abu Dhabi Department of Economic Development and sought to highlight opportunities for collaboration by the two countries in construction, health care, high-speed rail, clean energy, shipbuilding and semiconductors.
South Korean companies will go head to head with other nuclear energy specialists eager to have a share of the multibillion-dollar contracts. Last month, representatives of more than 40 US companies visited Abu Dhabi to gauge business opportunities. "Getting certified and approved on the Korean supply chain would be a big part of what this initial thrust is about," said Danny Sebright, the president of the US-UAE Business Council, who organised the trip.
For its part, KEPCO said it was committed to transparency throughout the process. "Our policy is we will procure these materials through international open bidding," Mr Byun said. While construction of the first reactor will not begin until 2013, a ceremonial groundbreaking on the site is expected to take place in June or July, followed by preliminary work such as site grading, environmental analysis and preparation for labour accommodation, Mr Byun said.
Since being awarded the contract, KEPCO has amassed a staff of 100 who are working on the UAE project in Seoul. Another 20 are based in Abu Dhabi, but this will increase to 50 by the end of the year, Mr Byun said. The final value of the four nuclear reactors could grow beyond the initial $20.4bn quote, he added. Factoring in inflation, the cost could increase by 3 per cent per year over the 10-year construction phase, he said. The current figure is an "overnight cost" estimate, or what the project would cost in today's dollars.
Abu Dhabi is considering building an additional four nuclear power plants, which would eventually bring its total to eight, but has not yet made any decisions.
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