Dubai: The UAE's utility sector is attracting increasing attention from international investors, especially Asian giants.
The most recent deal to build the $1.5 billion (Dh5.5 billion) Shuweihat S3 power plant was struck between a consortium including state-run Korea Electric Power Corporation (Kepco) and Japan's Sumitomo Corporation, and the Abu Dhabi Water and Electricity Authority (Adwea), according to a statutory filing by Kepco on the Korean Stock Exchange.
The two firms beat five international consortiums, including the UK's International Power, French GDF Suez and Japan's Mitsui.
"The deal is another example of how the trade relationship between Asia Pacific and the UAE is moving ahead and this can only have a long-term benefit on the economy," Mark McFarland, emerging markets economist at Emirates NBD, told Gulf News.
Abhay Bhargava, industry manager, energy and power systems practice at Frost and Sullivan, pointed out that Asian companies, like Hyundai Heavy Industries, Samsung, L&T and more have long been operating in the region and the UAE, engaged in multiple projects.
Private stake
"A number of Asian companies have pre-existed in the region and have been involved in varying degrees in the UAE utility sector," he said.
Gulf News reported details of the Shuweihat deal yesterday, quoting an Adwea official who said the contract winner will take a 40 per cent share in the power project.
The greenfield power generation plant with a capacity of around 1,600 megawatts will be built within the Shuweihat independent water and power project near Jebel Dhanna, 260 kilometres west of Abu Dhabi city. The gas-fired power plant is expected to start operations in the spring of 2014.
Bhargava said the project was part of the UAE's plans to increase power generation to meet the forecast increase in demand.
"The demand is rising at a rapid pace in the UAE. Regionally, demand is expected to nearly double over the next 10 years and a large part of it will be met by gas-fired power plants," he said.
