Why did Koreans win the $20bn UAE nuclear power order?

There is never a dull day in the United Arab Emirates. Just when journalists thought it safe to put up their feet for a holiday between Christmas and the New Year the government issues a brief statement placing a landmark $20.4 billion contract for four nuclear power stations with Korean companies.

What happened to the expected deal with a US consortium led by General Electric, or for that matter the widely trumpeted French group headed by Electricite de France? We will never know, of course, these things are decided behind closed doors.

Korean triumph

But hats off to Korea Power, a state-run utility which supplies almost all the power in South Korea, Doosan Heavy Industries & Construction, Hyundai Engineering & Construction, Samsung C&T Corporation, and Westinghouse Electric – whose inclusion will be some sop to the disappointed Americans.

The news will be jumped on by the New Silk Road enthusiasts who foresee a radical shift in Middle Eastern business towards Asia as the global powerhouse of the future. In this instance they are literally and metaphorically on solid ground.

From a political standpoint the UAE is keen to sign up to peaceful nuclear power to make a point to both the US and Iran. But a rapidly growing UAE economy is set to double its electricity demand to 40,000MW by 2020, and it hopes by then its oil will be worth a lot more in exports than as a power source.

So this growing nation needs nuclear power. It is also commercially sensitive and the most likely reason for the Koreans winning the bid is that they came in with the best offer.

Lowest cost

After all if you are going for low-cost electricity, you might as well get is as cheaply as possible. South Korea has aggressive expansion plans for its nuclear industry and a deal with the UAE is clearly a feather in their cap. But Samsung built the Burj Dubai, the world’s tallest building due to open January 4th, so they are hardly unknown in the UAE.

The Korean government says it is also pursuing contracts in Jordan, Turkey and China. Perhaps they should be looking to other emirates in the Gulf. It is hard to imagine that Qatar is not going to copy the UAE and go nuclear.