Plans to develop the UAE’s power generation and water desalination capacity continue to make progress with the recent signature by Britain’s International Power and the Marubeni Corporation of Japan of a 20-year agreement with the Abu Dhabi Water and Electricity Authority, ADWEA, to operate the Fujairah F2 water desalination and power generation plant at Qidfa on the UAE’s East Coast, north of Fujairah.

The plant will be owned by the Fujairah Asia Power Company in which International Power has a 20 per cent equity interest, with a further 20 per cent being held by Marubeni. The remaining 60 per cent will be held by ADWEA. The facility will be operated by a 50:50 joint venture between International Power and Marubeni.

The total project cost is estimated to be US $ 2.8 billion, which will be funded by a mix of debt and equity in an 80:20 ratio. For its 20 per cent share, International Power will make an equity investment of US $ 112 million. Financial Close is expected by 31 December 2007.

Commenting on the deal, Philip Cox, Chief Executive of International Power, said: “We are very pleased to have signed this agreement, as the Fujairah F2 project builds on our growing portfolio in the Middle East where we have significantgreenfielddevelopment and operational experience.”

The Qidfa F2 plant, on a greenfielddevelopment site adjacent to the existing power and water complex, will produce 2,000 MW of power and 130 MIGD of water on completion. It is expected to be fully operational by the end of 2010. The plant will use fivehighefficiencyAlstomGT26gas turbines in combined cycle mode, and twelve SIDEM 8.3 MIGD Multi Effect Distillation desalination units, together with a 30 MIGD Reverse Osmosis desalination plant. Fuel will be provided by ADWEC in the form of natural gas on a pass-through basis.

The Fujairah F2 project is the seventh IWPP for ADWEA in its successful programme of privatising the power generation and water desalination sector. The project will be International Power’s third major investment in the UAE. It also has operational interests in both the 1500 MW, 100 MIGD Shuweihat IWPP, near Jebel Dhanna in the Western Region, and the 2200 MW, 143 MIGD Arabian Power Company IWPP at Sa’s al-Nakhl island (formerly Umm al-Nar) near Abu Dhabi city.