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UAE’s nuclear finance deal ‘sets standard for region’

Rafael Grossi Barakah Nuclear Energy Plant IAEA/CreativeCommons
Director general of the International Atomic Energy Agency Rafael Grossi (front row, centre) visited the Barakah Nuclear Energy Plant in 2021
  • Barakah project successfully refinanced
  • Arab world’s first nuclear plant will be fully operational this year
  • Saudi Arabia sets ambitious nuclear capacity targets

The Barakah One Company has successfully completed the refinancing of the first commercial nuclear power station in the Arab World, based in the UAE.

Located 53 kilometres from the city of Ruwais, the $32 billion Barakah Nuclear Energy Plant is being developed by Barakah One – a joint venture between Emirates Nuclear Energy Corporation (Enec) and Korea Electric Power Corporation.

Barakah One has refinanced the full outstanding balance under the loan facilities extended by the Export-Import Bank of Korea.

The loan was originally granted in 2016 and has been refinanced through Abu Dhabi Commercial Bank and First Abu Dhabi Bank.

“We have showcased a new model to the world for nuclear developments, demonstrating that new nuclear projects like Barakah are bankable, and can be delivered in a timely manner while continuing to meet the highest standards of safety and quality,” Mohamed Ibrahim Al Hammadi, Enec managing director and CEO, said.

Commercial operations began at Unit 1 at Barakah in April 2021. The first three units of the project are now operational. 

When Unit 4 comes on board, scheduled for later this year, it will raise the Barakah plant’s total clean electricity generation capacity to 5.6gw, the equivalent of 25 percent of the UAE’s electricity needs.

Simon Henderson, director of the Bernstein Program on Gulf and Energy Policy at the Washington Institute for Near East Policy, told AGBI the power plant “represents an important technological achievement for the UAE”.

However, he cautioned whether its success could be replicated across the region.

“The UAE has set a standard but, given the capital cost of nuclear plants, other countries may find the initial expense too great,” Henderson said.

Neighbouring Saudi Arabia has set an ambitious target to create 17gw of nuclear capacity by 2040.

Three sites have reportedly been identified for a future nuclear power plant – namely Jubail, Tabuk and Jizan.

The kingdom has signed a number of agreements through the King Abdullah City for Atomic and Renewable Energy, a government body focused on nuclear and renewable energy.

Saudi Arabia’s foreign minister last month said they would rather have the US as one of the bidders for its civilian nuclear program.

Speaking at a joint press conference with US secretary of state Antony Blinken, Prince Faisal bin Farhan said: “We have differences of opinion but we are working on finding mechanisms for us to be able to work together.”

The New York Times reported in April that Saudi Arabia was offering to try to normalise relations with Israel in exchange for US cooperation with its nuclear program, although this has never been confirmed.

The kingdom is also said to be exploring options to work with China and Russia.

Liu Jing, vice chairman of the board of directors of the China Atomic Energy Authority, visited Jeddah in April to discuss potential cooperation in the use of atomic energy and nuclear technology.

“Saudi Arabia still prefers US technology and the ball is really in the US court to figure out a path to making that happen, otherwise lack of access pushes towards other suppliers,” Amnah Ibraheem, research analyst at the International Institute for Strategic Studies, said.

Ibraheem added that small modular reactors (SMRs) – nuclear reactors generating 300mw equivalent or less – could be an option worth exploring for countries like Bahrain and Qatar.

Saudi Arabia has already expressed an interest in acquiring them.

SMRs can be constructed in a factory and transported to suitable locations, making them safer and faster to build while also reducing infrastructure costs.

They are also more efficient, requiring less water and less refuelling, which reduces nuclear waste. 

“SMRs would make it easier logistically for small states such as Bahrain and Qatar to add nuclear power to their energy mixes,” Ibraheem said.