ABU DHABI NUCLEAR POWER AUTHORITY CONCERNED THAT USG VIEWS

C O N F I D E N T I A L ABU DHABI 000974 SIPDIS DEPARTMENT FOR NEA/ARP BMASILKO AND ISN/NESS ABURKHART/ASTUKALIN E.O. 12958: DECL: 08/28/2018 TAGS: PARM ENRG PGOV PREL KNNP AE SUBJECT: ABU DHABI NUCLEAR POWER AUTHORITY CONCERNED THAT USG VIEWS COULD DISADVANTAGE US FIRMS REF: 08/26/2008 COOPER/STUKALIN EMAIL Classified by Charge d'Affaires Martin Quinn, Reasons 1.4 (b,d). ¶1. (C) Summary: Emirates Nuclear Energy Corporation officials told Emboffs August 27 that they were concerned that comments attributed to USG officials could disadvantage US private sector participation in the UAE's nuclear energy program. Officials stressed that they hope to see strong US participation in the multi-billion dollar project and are very interested in US technologies. The UAE hopes to finalize a 123 Agreement with the US by year-end in order to ensure US firms are not disadvantaged "politically." EconOff assured ENEC officials that the USG was following the tenders carefully and hoped to see strong US business participation in the UAE nuclear program. End summary. ¶2. (C) Officials associated with the Emirates Nuclear Energy Corporation (ENEC) told A/DCM and EconOff on August 27 that they were concerned by comments a third party had attributed to unnamed senior State Department officials about US participation in ENEC's nuclear power program. Executive Affairs Authority Director of Economic Affairs David Scott said that an unidentified private sector entity told ENEC that a Department official believed ENEC had already decided to select French nuclear technology for a multibillion dollar contract to build several nuclear power plants in the UAE. According to this erroneous view, American participation might be limited to a token consultant arrangement to "balance out the flags" involved in the project. Scott said that he understood French statements to this effect in January had been misleading, and were frequently recycled in the press to the confusion of many, but asserted that senior UAEG officials had strongly reprimanded the French and made every effort to clarify the transparency of the bidding process. In fact, Scott, ENEC Acting CEO Mohamed Al Hamadi, and MFA Special Representative for International Nuclear Cooperation Hamad Al Kaabi confirmed that ENEC is seriously considering US nuclear technology and hopes that US firms will be competitive bidders for contracts related to Abu Dhabi's plan to build a "fleet" of nuclear power reactors. Al Kaabi was "eager" to team up with US technical expertise and Scott hoped the Department was not signaling "political surrender" in the bidding process. EconOff assured the group that the Mission and the USG are very hopeful US firms will participate in the program. ¶3. (SBU) Al Kaabi explained that ENEC is still planning to award the billion dollar "Managing Agent" [Project Manager] contract by the end of 2008 and that several US firms have already been short listed for this contract. Al Kaabi said that ENEC must develop a shortlist of bidders on the separate multi-billion dollar technology award anticipated in March 2009 and award the contract by the end of 2009 if it is to meet its goal of nuclear power generation by 2017. (Note: The exact value of the contract will depend on the number of plants ultimately constructed to meet growing UAE electricity demand. End note.) ENEC officials said that they were eager to have a dialogue with possible US bidders and had already begun discussions with GE. They stressed that the selection of light water technology was indicative of their interest in US participation, as well as the UAE's non-proliferation objectives. ¶4. (C) Scott noted that the timely finalization of a 123 Agreement with the United States would have a direct impact on the competitiveness of US firms. The technical shortlist would be based on logistical risk, commercial risk and political risk (assurance of continued access to technology and fuel). Scott said the UAEG's revisions (e.g., regarding unilateral termination) to the proposed 123 Agreement text were intended to reduce the political risk associated with selecting a US contractor. The UAEG hopes the agreement will be "durable" and take into consideration its long-term waste storage concerns and future technological developments related to reprocessing. However, Scott said the UAEG was open to US counterproposals that would address these issues. For example, Scott said limiting (and specifically identifying) the countries in which the UAE would seek to reprocess its fuel may be an acceptable alternative. ENEC officials stressed that they hoped to conclude a 123 Agreement with the United States, and similar agreements with 1-2 other countries (e.g., Japan and perhaps South Korea) by the end of 2008 in order to stick to the project timeline. QUINN