Identifier
Created
Classification
Origin
09ABUDHABI827
2009-08-19 11:40:00
CONFIDENTIAL//NOFORN
Embassy Abu Dhabi
Cable title:  

UAE NUCLEAR TENDER UPDATE

Tags:  ENRG KNNP PGOV ECON ETRD AE 
pdf how-to read a cable
VZCZCXRO6116
OO RUEHDE RUEHDH RUEHDIR
DE RUEHAD #0827/01 2311140
ZNY CCCCC ZZH
O 191140Z AUG 09
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2846
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHUNV/USMISSION UNVIE VIENNA 0102
RUEHFR/AMEMBASSY PARIS 1050
RUEHKO/AMEMBASSY TOKYO 0319
RUEHUL/AMEMBASSY SEOUL 0136
C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 000827 

NOFORN
SIPDIS

DEPARTMENT FOR ISN/NESS, EEB/CBA AND NEA/ARP
NSC FOR JOST
COMMERCE FOR ITA

E.O. 12958: 08/18/2019
TAGS: ENRG KNNP PGOV ECON ETRD AE
SUBJECT: UAE NUCLEAR TENDER UPDATE

CLASSIFIED BY AMBASSADOR RICHARD G. OLSON FOR REASONS 1.4 B AND D

REFS: A) ABU DHABI 491
B) ABU DHABI 157
C) 08 ABU DHABI 1432

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 000827

NOFORN
SIPDIS

DEPARTMENT FOR ISN/NESS, EEB/CBA AND NEA/ARP
NSC FOR JOST
COMMERCE FOR ITA

E.O. 12958: 08/18/2019
TAGS: ENRG KNNP PGOV ECON ETRD AE
SUBJECT: UAE NUCLEAR TENDER UPDATE

CLASSIFIED BY AMBASSADOR RICHARD G. OLSON FOR REASONS 1.4 B AND D

REFS: A) ABU DHABI 491
B) ABU DHABI 157
C) 08 ABU DHABI 1432


1. (C/NF) Summary: Three international consortia are bidding on the
UAE's nuclear power plant tender (reftels) valued at over USD 20
billion. KEPCO (now teamed with Westinghouse) appears to have the
technical and commercial advantage, while Areva, teamed with Bechtel,
is leveraging its French government connections. The GE/Hitachi team
appears far behind the front runners. A downselect to two consortia
is expected in late August; key officials say the contract is still
on schedule for a September 16 signature. End Summary.


2. (C/NF) Although bidders expected a final downselect to two
competitors in late July, Emirates Nuclear Energy Corporation (ENEC),
along with project manager CH2MHill, continues negotiations with
three international consortia pursuing the nuclear tender:
GE/Hitachi/Excelon (US/Japan/US),Areva/Bechtel/Gas de France (GDF)
(France/US/France),and KEPCO/Westinghouse (Korea/US). Negotiations
with each consortium of a nuclear steam supply system (NSSS)
provider, engineering, procurement and construction (EPC) contractor,
and operator are now expected to continue until August 21, when price
revisions are due. Executive Affairs Authority (EAA) Director of
Economic Affairs Dave Scott (protect throughout) told EconOff on
August 18 that there were significant price discrepancies between the
three bidders, and ENEC had visited Japan, Korea and France to
clarify pricing issues. Scott said it was clear that all three
consortia could perform the required work, now it was just a question
of which firms would be the best match for the UAE program. The
planned downselect to two firms, likely KEPCO and Areva, is now
expected before the end of August. All key UAE nuclear interlocutors
report the announced September 16 deadline for contract award is
still the target.

KEPCO/WESTINGHOUSE
--------------


3. (C/NF) KEPCO has long appeared to be the frontrunner in this

competition. Following the early May downselect to three consortia
(Ref A),Scott told EconOff that the Koreans had scored first of the
seven bidders. During a July 23 meeting with EconOff, Thorium Power
representative Dennis Hays (a key nuclear program advisor) (protect
throughout) reported the Koreans were still head and shoulders above
everyone else. Their price is better ("by a factor of 2"),and their
delivery schedule solid. Further, Hays said the Koreans can be
trusted to stay on schedule with minimal oversight, a fact that would
ease the initial burden on ENEC as it gets up to speed. Beyond the
technical advantage of the KEPCO bid, Korean officials continue to
engage in significant lobbying for the tender. The Korean Ambassador
told Charge that Korea's President may visit in late August to lobby
for KEPCO's bid.


4. (C/NF) UAE officials, including MFA Special Representative for
Nuclear Cooperation Hamad Al Kaabi and EAA Director Scott repeatedly
told EconOff over the past year that they were "very impressed" with
the Korean model. As the UAE's nuclear power program is
complementary to its economic diversification and national employment
effort, the Korean model of developing a high-tech national industry
around the original Westinghouse nuclear technology was likely
attractive.


5. (C/NF) In mid-July, Westinghouse, which had been eliminated in the
initial stages of the tender (reftels),told SCO and EconOff that it
had joined the KEPCO consortium. Westinghouse reported that ENEC
encouraged the firm to join another consortium after it did not make
the first downselect in May. While it is unclear if KEPCO was
specifically mentioned, it was clearly very important to the UAEG
that each consortium had a U.S. component.

AREVA/BECHTEL
--------------


6. (C/NF) Given the importance of delivering power by the 2017
target, Areva - given its significant delays in Finland and France -
has not appeared to be the strongest bidder. Thorium's Hays told
EconOff the only French advantage was political. Hays said that if
ENEC's view was the only factor, KEPCO would win, as the French bid
is not compelling on paper. But the French military, diplomatic, and

ABU DHABI 00000827 002 OF 002


cultural ties to the UAE could be a factor. Hays opined that the
U.S. content of the Areva bid was likely the highest, as Bechtel
would do much of the design work in the United States and Areva has
manufacturing facilities in Virginia. (NOTE: Bechtel's UAE Country
Manager told EconOff on August 16 that the firm has already
approached KEPCO and GE/Hitachi about its interest in subcontracting
opportunities if Areva loses. End Note.)


7. (C/NF) If Areva is not selected, Hays said ENEC could offer them
the fuel contract and the training segment as a consolation prize.
Both segments could be spun off into separate tenders, and the
Koreans could do what they excel at: technology and construction.
Areva has told us that they have a very active international training
program. However, the French Charge told EconOff on August 10 that,
due to high demand, Areva tends to prioritize fuel supply and
reprocessing for those who purchase Areva technology.

GE/HITACHI
--------------


8. (C/NF) The GE/Hitachi-led consortium never seemed to garner much
interest from the Emiratis, although it was unclear whether the
quality of the bid was not strong, or there were specific concerns
about the technology. A local GE rep told EconOff on August 17 that
ENEC and other UAEG officials had repeatedly told the GE consortium
that they were not acting like a "team," even after GE/Hitachi took
specific steps to improve partner coordination.

LEGAL PROGRESS
--------------


9. (C/NF) While the UAE has acceded to three of the four IAEA
conventions outlined in its 2008 White Paper (Convention on Nuclear
Safety, Joint Convention on the Safety of Spent Fuel Management, and
Amendment to the Convention on the Physical Protection),the national
nuclear law is still awaiting presidential signature. The EAA's Dave
Scott told EconOff on August 18 that Minister of Presidential Affairs
Sheikh Mansour bin Zayed, who is currently abroad, is expected back
within days and will present the law to the President for signature.
Scott was optimistic the law would be ratified before the end of
August.


10. (C/NF) Regardless of the law completion, ENEC Interim CEO Mohamed
Al Hammadi told EconOff on August 5 that the Abu Dhabi Government,
perhaps the Executive Affairs Authority, could sign the contract on
behalf of ENEC if the nuclear law was not finalized before
mid-September. FANR DG Designate Bill Travers told EconOff in late
July that he did not view FANR's establishment as a mandatory step
before the contract was awarded. Travers said that the initial work
on the tender would not be dependent on FANR guidance or regulations.
OLSON