The United Arab Emirates has signed a deal worth up to $2 billion for Malaysia Mining Corp Bhd (MMC) to build the Gulf's first coal-fired power plant. The UAE sits on around 3.5 percent of the world's total gas reserves and is the fifth-largest oil exporter. But like other big oil exporters in the region, the UAE is short of natural gas for power generation and is looking for alternatives. “This demonstrates the absurdity of the gas shortage in the region,” said Mark Lewis, managing director of Energy Market Consultants. “It's an energy producing country importing energy. The region is awash with gas but hasn't developed supplies.” The Gulf holds much of the world's oil and gas reserves but has negligible coal, so power stations will need imports. Gulf states Saudi Arabia, Oman and Bahrain have all studied the possibility of building coal-fired power plants as they struggle with rising power demand and gas shortages. Coal plants would make economic sense as it was cheaper to import coal than keep back oil exports to burn for power, Lewis said. The 1,000 megawatt plant will be built in the northern emirate of Ajman, UAE state news agency WAM reported on Thursday, citing a member of Ajman's ruling family. MMC will finance construction and operate the plant for 20 years, during which time part of the profit will go to Ajman. Construction will take 40 months, WAM said. Over the next six months, feasibility, technical and environmental studies would be carried out on how to limit the impact on the environment of burning coal, Sheikh Rashid Bin Humaid Al-Nuaimi, the head of municipality and planning said. The plant will be close to hotels and tourist resorts in Ajman, he added. Other emirates are also looking at alternatives to gas for power generation, from nuclear power to solar plants. The emirate of Abu Dhabi, capital of the UAE and holder of over 90 percent of its oil reserves, signed in January a deal with oil major BP and mining company Rio Tinto to build a $2 billion hydrogen power plant. Abu Dhabi also plans to build a 100 MW solar plant. Dubai is undertaking a feasibility study for a hydrogen-fired power plant, using imported hydrogen extracted from coal, a Dubai official said on Thursday. Cement makers in the UAE and Oman already import coal to fire their furnaces when they face gas shortages. MMC International chief executive officer Feizal Ali said the project followed the group's success in power and water projects in Saudi Arabia, Oman, Jordan and Algeria. MMC Utilities will have the sole right to do technical and economical feasibility studies. Once the studies are approved, it could set up a concession company that will manage, operate and maintain the power plant for 20 years, MMC said in a statement. The Ajman government will buy the electricity produced throughout the concession period, MMC said. “I'm optimistic that our crossborder investments, such as this power plant project in the UAE, will go a long way towards ensuring sustainable earnings for MMC for many years to come,” he said. MMC Utilities is focused on the utilities and logistics sectors. The company is actively bidding for projects in the Middle East. MMC is the joint master developer of the $30 billion Jizan Economic City in Saudi Arabia, with the Saudi Binladin Group. MMC International has invested in a new container terminal at Jeddah Islamic Port, which comprises three berths with a capacity of 1.5 million TEUs (twenty-foot equivalent units). MMC also has interests in the Shuaibah independent water and power plant project in Saudi Arabia, a desalination plant in Algeria, the Central Electricity Generation Co in Jordan and the Dhofar Power Co in Oman.
