Korea Electric Power Corporation (Kepco) and the Emirates Nuclear Energy Corporation (Enec) on 20 October signed a joint venture agreement for "long-term partnership and cooperation in the United Arab Emirates’ peaceful nuclear energy programme". They also established a jointly owned independent subsidiary, Barakah One PJSC, which will "represent the commercial and financial interests" of the Barakah NPP project under construction in Abu Dhabi. Enec selected a consortium led by Kepco to build four APR-1400 reactors at Baraka in a $20bn deal announced in December 2009
Construction of the Barakah NPP began in 2012 and overall construction is now more than 71% complete. Unit 1 is scheduled to start up in 2017, with the other units following at yearly intervals. The four reactors are expected to provide about 25% of the UAE's electricity and save up to 12mt of greenhouse gas emissions a year.
The new joint venture aims "to jointly capitalise on Kepco's 40 plus years of nuclear experience for the benefit of the Barakah project", a joint statement said. Kepco will take an 18% stake in Barakah One, with Enec owning the remaining 82%. Nasser Al Nasseri, previously chief financial officer of Enec, has been appointed acting CEO of Barakah One.
The agreement entitles Kepco to receive an 18% stake in Enec subsidiary Nawah Energy Company, with Enec holding the remaining 82% of the company. Nawah was established in May to operate and maintain the four Barakah units.
The two companies also announced today the formal financial close for financing of Barakah project. Barakah One PJSC will manage the fund, estimated at $24.4bn, according to the joint statement. It will comprise direct loan agreements of about $19.6bn as well as $4.7bn in equity commitments provided by Enec and Kepco as part of the JV deal.
The direct loan agreements include: $2.5bn from the Export-Import Bank of Korea (KEXIM); $250m from the National Bank of Abu Dhabi, First Gulf Bank, HSBC and Standard Chartered; and up to $16.2bn from the Abu Dhabi Department of Finance. They comprise the overnight cost of the Prime Contract for construction and commissioning of the NPP, interest during construction and the cost of initial nuclear fuel, as well as allowances for potential inflationary commodity price increases during the construction period, such as construction materials.
