Abu Dhabi plans to ramp up power output capacity

Abu Dhabi aims to raise power generation capacity by 35 per cent within five years, but may face challenges in attracting foreign firms as competition for projects across the Gulf Arab region heats up.

Demand will rise almost 80 per cent in the same period to 10,600MW, while capacity reaches 12,503MW in 2010, Abu Dhabi's five-year strategic plan issued on Wednesday showed.

Abu Dhabi is the capital and one of seven members of the United Arab Emirates, the world's sixth-largest oil exporter.

Abu Dhabi Water and Electricity Authority's (Adwea) director of privatisation Abdulla Al Nuaimi said the industry was facing challenges to meet growth needs due to a lack of contractors to build new power plants.

"Fuel is not the problem," he told Reuters. "The challenge is engineering, procurement and construction contractors. There is too much competition in the market with too many projects coming up."

Demand for power in the world's largest oil-exporting region is surging on population growth and commercial and industrial expansions fuelled by record oil prices.

Projects across the region have increasingly suffered delays over the last two years as soaring construction costs, labour shortages and a lack of qualified contractors have hit market.

To mitigate those challenges, Adwea is staggering the bid process for two new power plants to the west of the emirate. "We are not launching the projects together ... we are timing the launch very carefully," Al Nuaimi said.


Adwea said earlier on Wednesday it planned to build a new power and water desalination plant at a cost of about $2 billion (Dh7.34bn) at Shuweihat.

The Shuweihat 3 plant will have power capacity of about 1,500MW and 100 million gallons of water, Al Nuaimi said.

International contractors will be invited to bid with the plant which Adwea wants to run by 2012, he said.

Britain's International Power, France's Suez SA and Japan's Marubeni Corporation are among international firms that have profited from investing in power and water facilities in Abu Dhabi, the largest UAE emirate, which opened its utilities to private investment in 1997.

Adwea expects to receive proposals from consortium in the coming days for the Shuwiehat 2 plant, its chairman Sheikh Diyab bin Zayed Al Nahayan said. The plant, also scheduled to be commissioned by 2012, will have power capacity of 1,600MW and pump 100 million gallons a day of water.

Abu Dhabi has seven power and water projects with foreign partners.

The economy of the UAE, like in other Gulf oil exporting nations, is booming on a sixfold increase in crude oil prices since 2002.

Power demand is also growing due to a rapid growth in Abu Dhabi's population, which is expected to surge to nearly 3.17 million by 2030 from around 1.3 million at present, Abu Dhabi Water and Electricity director of planning and studies Keith Miller said in March.

The emirate also plans to include private investors in its sewerage industry. Al Nuaimi said on Wednesday Adwea is inviting international firms to bid to extend its drainage and sewage systems at a cost of Dh4bn.