KEPCO on Inside Track for UAE's New Contract for Four Nuclear Power Stations

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--In 2008-10, there were 38 new nuclear power station construction starts, but in 2011-12, there were only two, according to research from the University of Greenwich in the U.K. This could be called "post-Fukushima syndrome," and could over dramatize the negative scenario in the light of a probable dynamic new nuclear build schedule going through 2020.

South Korea's Knowledge Economy Minister Hong Suk-woo said that he has heard that the United Arab Emirates (UAE) is planning to order four additional nuclear power stations, reported the Korea Herald.

In 2011, work began on the first nuclear power station supplied by Korea Electric Power Corporation (NYSE:KEP) (KEPCO) (Seoul, South Korea) under a $20 billion contract awarded by the UAE in 2010. This build program will see the four generation-3, APR-1400 reactors begin to supply power to the UAE/Gulf Cooperation Council (GCC) grid in 2017 and have the total of four power stations' supply in place in 2020.

KEPCO beat out bidding competition from GE-Hitachi (Wilmington, North Carolina) and Areva S.A. (EPA:CEI) (Paris, France) to win the tender for the four 1,400-MW plants, to the surprise of many in the industry. Price was said to be the deciding factor, but KEPCO's domestic installation experience and reliability must have backed the price factor. South Korean investors also took an equity investment stake in the four-station project. KEPCO has an installed nuclear generation capacity of about 18,000 MW.

"Since all the neighboring infrastructure will be based on the Korean standard nuclear power plant, there is a good chance Korea could win the additional orders," the minister said. He added that projects would create about 2,000 jobs in the nuclear power sector, which had the potential to increase to 6,000 by 2020.

For the current build program, which will make the UAE the first Gulf Arab nation with nuclear power, Abu Dhabi will fund $10 billion equity with another $10 billion coming from export credit agencies.

It is reported that the Middle East currently has more than $180 billion of power projects of all types under construction. For related information, see June 29, 2010, article - United Arab Emirates Prepares for Construction of Country's First Nuclear Power Plant, and March 18, 2010, article - South Korea's KEPCO to Award $10 Billion Sub-contracts for UAE's Nuclear Power Projects.

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