A Japanese consortium led by Marubeni submitted the lowest bid for the Al Mirfa gas-fired plant.
Japan leads the way in bid for Abu Dhabi's next conventional power plant
A Japanese consortium led by Marubeni submitted the lowest bid for Abu Dhabi's next conventional power plant.
The Japanese power company and its partners Osaka Gas and Kansai Electric were one of six groups that submitted their bids to the Abu Dhabi Water and Electricity Authority (Adwea) for the Al Mirfa gas-fired power plant.
The authority aims to award the tender for the power plant before the onset of summer, Abdulla Saif Al Nuaimi, Adwea's director general, told The National in January.
The 1,500 megawatts plant will be constructed in the coastal town of Mirfa, and have a desalination component able to produce 52 million gallons of potable water.
Adwea's power projects are tendered as public private partnerships, under which private companies bid for a 40 per cent stake in the plant. They will construct and operate the project under an arrangement known as build, own and operate.
Under this system, companies have to provide financing for the project, and are remunerated through the tariff paid by the Government for the plant's power and water. According to industry sources, Marubeni's bid proposed the lowest tariffs.
The tender process is dominated by Japanese companies. Of the 12 companies that submitted bids, seven are Japanese, according to the trade publication SparkSpread. Of the remaining five, two are European, two are from the Arabian Gulf, and one is based in Singapore.
Japanese power companies enjoy a competitive advantage over their European counterparts as their banks are flush with liquidity and keen to invest.
Meanwhile, European banks are struggling to shrug off the effects of successive banking crises, and higher capital retention requirements set out by new legislation.
Asian and European companies are able to draw on export credit agencies, who support their national companies by keeping finance costs low. In recent years, Korean contractors have used such financing to become the undisputed leaders in the Gulf's energy construction sector.
The Mirfa plant is scheduled for completion in 2016. Abu Dhabi is racing against time to match its power and water generation capacity with spiralling demand.
Official estimates put peak demand for electricity supplied by Adwea at more than 13,000MW this year, rising to about 19,000MW in 2017, when the emirate's first nuclear reactor comes online. By the end of this year, capacity is expected to stand at about 14,390MW.
Apart from gas-fired power plants such as Mirfa, and the four nuclear reactors being constructed in Barakah in the Western Region, the Government is also looking to build up a renewable energy portfolio. Shams-1, the region's first large-scale solar plant, will be inaugurated this month.