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U.A.E.’s Nuclear Power Program Said to Cost $30 Billion

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Nov. 24 (Bloomberg) -- The United Arab Emirates’ nuclear-power program, a joint venture between state-owned Emirates Nuclear Energy Corp. and Korea Electric Power Corp., will cost about $30 billion, according to two people with knowledge of the project.

Financing will be split into one-third equity and two-thirds debt, the people said, declining to be identified because talks are confidential. Fahad al-Qahtani, a spokesman for Emirates Nuclear, said the financing strategy has yet to be decided. Korea Electric declined to comment about the cost of the project.

Emirates Nuclear is going ahead with plans to develop four nuclear reactors in the U.A.E. even as other countries halt atomic programs after the March earthquake and tsunami in Japan caused radioactive material to be released from its Fukushima plant. Korea Electric, the country’s biggest electricity producer, won a contract in 2009 to complete the plants from 2017 to 2020, which will make the U.A.E. the first Gulf Arab nation with atomic power.

Abu Dhabi will provide most of the $10 billion equity, and $10 billion of the debt is likely to come from export-credit agencies, mainly from South Korea, one of the people said.

Work in Progress

The remaining $10 billion will be a mix of bank financing and sovereign debt, the person said. Abu Dhabi may consider a government-debt issue and Emirates Nuclear may raise debt backed by the government, the person said. A financing agreement will probably be reached by the end of 2012, the second person said.

“It’s a work in progress,” al-Qahtani said by phone from Abu Dhabi yesterday. “We haven’t yet finalized the finance strategy and we are still looking at different options.”

The U.A.E. will decide on the financing structure by the end of March, al-Qahtani said earlier this month.

The cost of construction was expected to be $20 billion when it was first announced two years ago. In addition to the construction, South Korea planned to participate in the operation, maintenance and fuel supply, earning a further $20 billion, JoongAng Ilbo newspaper reported at the time.

Korea Electric beat General Electric Co. and Areva SA of France for rights to build the U.A.E.’s first nuclear reactors. This is Korea Electric’s first international nuclear power project.

To contact the reporters on this story: Ayesha Daya in Dubai at adaya1@bloomberg.net; Stefania Bianchi in Dubai at sbianchi10@bloomberg.net

To contact the editors responsible for this story: Stephen Voss at sev@bloomberg.net

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