Dubai: The Export-Import (Ex-Im) Bank, the official export credit agency of the United States, has authorised a $2 billion direct loan to UAE’s Barakah One Company to underwrite the export of American equipment and service-expertise for the construction of a nuclear power plant in the UAE, a bank statement said.
The credit line comes under the ‘U.S. – UAE 123 Agreement for Peaceful Civilian Nuclear Energy Cooperation’ signed by both the countries in 2009 and the ‘Arrangement Between the Nuclear Regulatory Commission of the U.S. and the Federal Authority for Nuclear Regulation of the UAE For the Exchange of Technical Information and Cooperation in Nuclear Safety and Security Matters’ in 2010.
The United States’ National Security Council and the Departments of State and Energy have approved the transaction.
This will help more than 5,000 American jobs in 17 states and comes at a crucial time when US unemployment rate flirts around the psychological 8 per cent mark ahead of President Barack Obama’s re-election bid in November.
“Total non-farm payroll employment rose by 96,000 in August, and the unemployment rate edged down to 8.1 per cent,” the U.S. Bureau of Labour Statistics reported on Friday.
“According to estimates derived from U.S. Census Bureau statistics, the line of credit will support approximately 5,000 American jobs across 17 states,” Ex-Im Bank said.
The 77-year old Ex-Im Bank enables U.S. companies — large and small — to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.
The transaction will finance the construction of the first nuclear power plant on the Arabian peninsula, which upon completion will number among the largest nuclear-generating facilities in the world.
Last year, the Ex-Im Bank extended $415 million worth of export credit to UAE companies – mainly to support aircraft sale by the Boeing Company.
“However, till the end of our last fiscal year ending September 30, 2011, our outstanding exposure to the UAE stood at $3.7 billion (Dh13.65 billion)," an Ex-Im Bank spokesperson told the Gulf News yesterday.
The nuclear construction industry in the Middle East and North Africa (MENA) is valued at $300 billion (Dh1.1 trillion) after projects in the UAE, Saudi Arabia, Jordan and Egypt are rapidly progressing.
The loan ranks as Ex-Im Bank's largest transaction in the UAE to date and counts as Ex-Im Bank's first greenfield nuclear-plant financing since the late 1990s.
"The 5,000 American jobs figure speaks volumes about the importance of the transaction to the U.S. economy," said Ex-Im Bank Chairman and President Fred P. Hochberg. "But in addition to bolstering American jobs, Ex-Im Bank will make history by backing the construction of the first nuclear power plant on the Arabian Peninsula."
The UAE is developing four nuclear reactor power-generating units on a coastal strip along the Arabian Gulf approximately 220 kilometers from the city of Abu Dhabi, a site chosen in light of seismic, socio-economic, and environmental factors. The reactors, supplied by the Korea Electric Power Corporation (KEPCO) and based on the state-of-the-art APR 1400 design, will come online at one-year intervals effective 2017 and yield an aggregate capacity of 5,600 megawatts gross electricity.
MENA and African nations including Saudi Arabia, UAE, Jordan, Egypt, Turkey and South Africa are pushing forward new nuclear construction projects that offer global engineering firms over $300 billion of new contracts from 2012, said a recent report. Over the next 15 years, as many as 37 new reactors could be built at a cost of up to $200 billion.
“The MENA nuclear construction market has boomed since 2009 when KEPCO secured the Middle East’s first tender for 4 new units to be constructed in the UAE at a cost of $20 billion. UAE nuclear utility ENEC have since confirmed a further 12 units are required to fulfill their energy needs; generating over $60 billion in new contracts over the next decade,” the report said.
Westinghouse Electric Company LLC, a Pittsburgh, Pa.-based company of Toshiba Corporation, is the largest exporter involved in the transaction and will provide the reactor coolant pumps, reactor components, controls, engineering services, and training. Westinghouse nuclear power plants are currently under construction in China and the United States, among others.
"We remain dedicated to ensuring an effective implementation of the project and related loan," said Ric Perez, the president and chief operating officer of Westinghouse Electric Company. "This work will create and sustain U.S. jobs in California, Connecticut, New Hampshire, Ohio, Pennsylvania, South Carolina, Texas and other states home to Westinghouse sub-suppliers. Within Westinghouse alone, the Barakah project will allow us to maintain about 600 U.S. jobs. In addition, the Bank's support will sustain hundreds of well-paying jobs at Westinghouse's U.S. sub-suppliers and indirect jobs in the service industry."