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Enec and Kepco create commercial subsidiary Barakah One
2016-10-24

The Emirates Nuclear Energy Corporation (Enec) and the Korea Electric Power Corporation (Kepco) have today signed a joint venture agreement for "long-term partnership and cooperation in the UAE's peaceful nuclear energy program". The two companies also announced establishment of Barakah One PJSC, an independent subsidiary they jointly own, which will "represent the commercial and financial interests" of the Barakah project.

The signing of the joint venture agreement (Image: Enec)

Construction of the Barakah nuclear power plant in Abu Dhabi started in 2012 and overall construction of units 1 to 4 is now more than 71% complete.

With the signing of the joint venture, Enec and Kepco have established a new, long-term partnership "to jointly capitalize on Kepco's 40 plus years of nuclear experience for the benefit of the Barakah project", they said in a joint statement.

Mohamed Al Hammadi, Enec CEO, said: "With the signature of the joint venture agreement, both organizations are establishing a new nuclear corporation designed to guide the Barakah project into new levels of performance. With Kepco as our partner, we now have the right structure to ensure the long-term sustainability of the Barakah project well into the future."

Hwan Eik Cho, President and CEO of Kepco, said: "It is our top priority to devote our resources and efforts towards the successful delivery and operation of the first Korean-designed nuclear energy plant being built outside Korea."

Under the joint venture, 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 also 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 Barakah Units 1 to 4.

Khaldoon Al Mubarak, chairman of Enec's board of directors, said the joint venture agreement is an "unprecedented partnership" between two countries in the field of nuclear energy and is designed "to further enhance our joint capacity to develop and operate a peaceful nuclear energy program in adherence to the highest standards of safety, quality, security and operational transparency".

Joo Hyunghwan, minister for trade, industry and energy of the Republic of Korea, added that the Korean government will "continue to support Kepco in its international projects and it is our priority to ensure the success of the Barakah Nuclear Energy Plant".

In a $20 billion deal announced in December 2009, Enec selected a consortium led by Kepco to build four APR-1400 reactors at Barakah, about 50 km from the town of Ruwais. 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 12 million tonnes of greenhouse gas emissions annually.

Loan agreements

The two companies also announced today the formal financial close for the financing of the Barakah project. Barakah One PJSC will manage the fund.

The total amount of financing to be managed by Barakah One is estimated at $24.4 billion, according to the joint statement, composed of direct loan agreements of about $19.6 billion as well as a total of $4.7 billion in equity commitments. The equity commitments are provided by Enec and Kepco as part of their new joint venture agreement.

The direct loan agreements that Barakah One has entered into are: $2.5 billion from the Export-Import Bank of Korea (KEXIM); $250 million from the National Bank of Abu Dhabi, First Gulf Bank, HSBC and Standard Chartered; and up to $16.2 billion from the Department of Finance of Abu Dhabi.

They include the overnight cost of the Prime Contract for construction and commissioning of the Barakah plant, interest during construction and the cost of initial nuclear fuel. They also include allowances for potential inflationary commodity price increases, such as construction materials, during the construction period.

Riyad Al Mubarak, chairman of the Abu Dhabi Department of Finance, said: "From the beginning, the peaceful nuclear energy program in the UAE has had the full support of the Abu Dhabi Government. Now, the Department of Finance is honoured and proud to be a direct supporter of the project which will bring clean and reliable nuclear energy to the UAE grid and promote the economic growth of our country and the development of our society for decades to come."

Lee Duk-Hoon, chairman and president of KEXIM, added: "Our experience with major projects around the world provides us with unique insight and capabilities, all of which will be employed to ensure the success of the Barakah nuclear energy plant."

  
 
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