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How Korea Won the UAE Mega Nuke Reactor Deal

Posted December. 27, 2009 00:00,   


Korea failed to win contracts to build nuclear power plants in China in 2004, South Africa in 2007, and Canada last year.

Yesterday, however, a Korean consortium landed a mega deal worth 40 billion U.S. dollars to build four nuclear reactors in the United Arab Emirates. Despite having no experience in building such plants overseas, Korea has trumped the U.S. and France in securing the largest nuclear energy deal in world history.

Experts say an effective strategy helped land the contract for Korea after a year-long battle. The bidding for the project began in May, but the Korea Electric Power Corp., or KEPCO, began preparing for it from December last year.

After a Q&A session for the project was held in Abu Dhabi in February, KEPCO decided to create a global consortium in systematic fashion.

First, KEPCO joined hands with the U.S.-based Westinghouse Electric, now a unit of Toshiba Corp. of Japan, and Britain’s AMEC. A KEPCO official said, “By joining forces with foreign companies, we were able to promote ourselves as a global team led by Korea.”

“The foreign companies in our consortium were approached by our competitors Hitachi and Areva, but considering our low bidding price and stable operational capability, they decided to join us.”

The Korean consortium also paid the utmost attention in selecting construction companies. Through careful screening, Hyundai Engineering and Construction, and Samsung C&T Corp., which are well known in the UAE, were chosen.

Along with KEPCO, Korea Nuclear Fuel, Korea Hydro and Nuclear Power, Doosan Heavy Industries and Engineering, and Samsung Heavy and Engineering joined the consortium. This drew the UAE’s attention to the consortium’s ability to assume responsibility for the nuclear plants from construction to operation.

An official at the Knowledge Economy Ministry in Seoul said, “We actively promoted our comprehensive system from design, technology development and construction to operations while Areva, our most formidable competitor, had only the ability to build nuclear plants. This strategy worked.”

The road to the final selection was not smooth, however. Due to close ties between the UAE and France in politics, economy and military affairs, rumors swirled early this month that the French nuclear group Areva would win the bid. French President Nicolas Sarkozy also visited Abu Dhabi in May to help Areva’s cause.

Not to be outdone, the Korean government pulled out all the stops to win the contract. High-ranking officials from the ministry frequently called their counterparts in the UAE to explain the advantages of selecting the Korean consortium. The Korean presidential office of Cheong Wa Dae, the Education, Science and Technology Ministry, and the Defense Ministry did also their part.

A KEPCO official said, “I never imagined such full support from the government in the initial phase of the bid,” adding, “The Office of the Prime Minister and Cheong Wa Dae took the lead in meeting the requirements of the bidding team.”

From the beginning, then Prime Minister Han Seung-soo led the support campaign, and after he left office in November, Cheong Wa Dae took over.

A Cheong Wa Dae source said, “The presidential office even ordered all ministries to help meet every need of the bidding team without delay.”

Korea also boosted its international image by becoming an exporter of nuclear power plants in just 50 years, and this helped the bid. An official at the Knowledge Economy Ministry said, “The UAE has no technology in nuclear power generation and is interested in getting it.”

“In this light, the UAE hopes to become a nuclear power plant exporter like Korea and this influenced the final selection.”

In addition, the news that Areva failed to meet a construction deadline in Finland for two years and consequently had building costs double also helped the Korean consortium win the UAE deal.