Politics is key to nuclear award in Emirates

03 November 2009

The scale and political significance of the deal will mean price is unlikely to be the deciding factor

As new details of the UAE’s plans to develop nuclear power plants emerge, speculation about which of the three bidding groups is best placed to win the contract continues.

Sources close to the project say Emirates Nuclear Energy Corporation (Enec), the government agency running the bidding process, is postponing an award until a co-operation agreement with the US has been finalised.

The bilateral deal with the US will permit the transfer of technology, materials and equipment, such as reactors, between the two countries. This is critical given that one of the bidders for the nuclear project is a team of the US’ GE and Japan’s Hitachi.

Some may choose to interpret the delay as a sign of the UAE’s intention to award the contract to a US company. But the agreement will in fact create a level playing field for the three bidders as the UAE has already concluded similar deals with France and South Korea.

Separately, France is said to be exerting significant political pressure on the UAE in the hope that the estimated $20bn contract will go to a team of Areva, Suez and Total.

France’s chances could be affected – either positively or negatively – by the fact it has already established a strong strategic position for itself in the UAE. In late May, it opened a military base in Abu Dhabi – its first in the Gulf.

According to the sources, however, it is the South Korean team of Korea Electric Power Corporation and Hyundai Engineering & Construction that has submitted the lowest bid for the scheme.

But while price is always a key element in determining how contracts are awarded, in this case, the scale and political significance of the deal mean it is unlikely to be the deciding factor.

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