Dubai: A private joint Emirati-Spanish venture is building a Dh719 million ($195.7 million) desalination plant in the UAE’s most northern emirate, Ras Al Khaimah.

Utico Middle East, a subsidiary of Abu Dhabi-based Ghantoot Group, and Spanish energy firm Grupo Cobra signed an agreement in Dubai on Thursday to incorporate Al Hamra Water Company, under a 60:40 partnership, which will oversee the development of the desalination plant.

The facility will generate 22 million gallons of water a day for the emirate and neighbouring areas, according to a joint statement.

Richard Menezes, Managing Director of Utico Middle East, told reporters that most of water will be directly supplied to Federal Electricity & Water Authority (Fewa).

Fewa supplies electricity and water to Ras Al Khaimah, Ajman, Umm Al Quwain, Fujairah and some east coast cities.

Construction on the facility will start next month with the plant slated to start supplying water to Fewa by June 2017 and becoming fully operational in 2018, Menezes said.

Return on investment

It is the first desalination plant in the region to be independently financed, which will be 80 per cent debt financed and 20 per cent liquidity, Menezes said

The return on investment is expected to be between 15 and 16 per cent, Menezes said, however, he declined to state over what time frame.

Construction is expected to create 300 jobs and a further 80 permanent positions once the facility is operational, of which at least 20 per cent (16 jobs) will be guaranteed to Emiratis, according to the statement.

A tender has been issued to supply solar panels to the facility, with 16 companies, including one Chinese firm, pre-qualified, Menezes said.