South Korea's KEPCO to Award $10 Billion EPC Sub-contracts for UAE's Nuclear Power Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading South Korean energy company Korea Electric Power Corporation (NYSE:KEP) (Seoul) will award engineering, procurement and construction sub-contracts worth $10 billion to South Korean companies to build nuclear power plants in the United Arab Emirates (UAE).

In December, a KEPCO-led consortium signed a $20.7 billion civilian nuclear agreement with the UAE to design, build and operate four nuclear power reactors with a capacity of 1,400 MW each. The consortium includes Doosan Heavy Industries & Construction Limited (SEO:034020) (Gyeongsahngnam-Do, South Korea), Toshiba Corporation (TYO:6502) (Tokyo, Japan), Samsung C&T (SEO:000835) (Seoul), Westinghouse Electric LLC (Monroeville, Pennsylvania) and Hyundai Heavy Industries Company, Limited (SEO:009540) (HHI) (Ulsan, South Korea). Three main sub-contracts are expected to cost about 50% of the total project cost. Sources indicate that KEPCO is in talks with its consortium partners to finalize the sub-contracts.

The construction period will span 10 years. The first nuclear reactor will begin to supply power to the national grid by 2017. The remaining three units will be commissioned by 2020. The four nuclear reactors are expected to take care of 25% of UAE's power demand.

Nasser Ahmad Al-Souwaidi, Chairman of Abu Dhabi Department of Economic Development (Abu Dhabi, UAE), indicated that KEPCO was selected for its proven experience and expertise in nuclear technology implementation, delivery time, and the company's assurance that it will create jobs in the UAE. South Korea, which has more than 30 years of experience in building and operating nuclear power plants, has not witnessed any serious incidents in nuclear installations.

In a related development, Turkish energy entity, Elektrik Uretim AS (EUAS) (Ankara, Turkey) will finalize a nuclear cooperation agreement with KEPCO shortly. As part of the agreement, KEPCO will provide assistance in developing APR-1400 nuclear power plants in the Sinop province on Turkey's Black Sea coast. Turkey also has urged KEPCO to expedite the preliminary preparatory activities, which KEPCO had indicated would require about two years to complete. EUAS and KEPCO have agreed to perform the preliminary activities and then sign the main agreement, if conditions are acceptable to both parties.

KEPCO is holding discussions with Enka Insaat Ve Sanayi AS (IST:ENKAI) (Istanbul, Turkey) to build a $20 billion nuclear power plant on Turkey's Black Sea coast. Enka Insaat is likely to hold a 50% stake in the venture, which will build six reactors of 1,400 MW each.

Turkey, which relies heavily on energy imports, is planning to build two nuclear reactors. Despite imports, the country's power generating capacity is unable to keep up with its growing economy. During the 2003-08 period, Turkey's economy grew at an annual average of 6%. The country has plans to build a nuclear power generating capacity of about 8,000 to 10,000 MW. Since the 1960s, Turkey has made four attempts to build and operate nuclear power plants. However, the plans had to be deferred due to spiraling costs and environmental concerns.

In 2008, a Turkish court cancelled the nuclear power construction tender awarded to Russia's nuclear power services company JSC Atomstroyexport (Moscow, Russia), citing tariff and pricing issues. The project was jointly developed by Turkey with Atomstroyexport and Inter-RAO EES OAO (MCX:IRAO) (Sochi, Russia). In January, the Turkish government reinitiated talks with Russia and agreed to provide licenses to build a nuclear power plant at Mersin, in the Akkuyu hamlet on the Mediterranean Coast. Several domestic and international firms have expressed interest to be part of Turkey's nuclear power program. The government has indicated that the country was open to signing nuclear cooperation pacts with France, Canada and the U.S.

Presently, about 50% of Turkey's power generating capacity is gas-fed. According to "Turkey Power Report -- First Quarter 2010," which is published by Business Monitor International (BMI) (London, England), Turkey's population is expected to increase to 76.6 million in 2014, from 72.2 million in 2009. By 2014, the country's per capita power consumption is expected to increase by 20% to 179 terawatt-hours. By 2030, the Turkish government is optimistic that nuclear power will account for nearly 20% of the primary energy demand.

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