AJMAN // Ajman has signed a US$2 billion (Dh7.34bn) deal with MMC, the Malaysian power producer, to build the Gulf region’s first coal-fired power plant, one that could start generating one gigawatt of electricity early in 2012.

The agreement, reported by the official WAM news agency, highlights the critical power shortage faced by the UAE’s northern emirates, where commercial and residential property projects have encountered major delays over connections to the region’s electricity grid.

Sheikh Rashid bin Humaid Al Nuaimi, the chairman of the Department of Municipality and Planning in Ajman, said the project’s aim was to provide enough electricity to property projects planned for the emirate in the near future. Two other power plants to be built in the next few months by the Federal Electricity and Water Authority could supply the developments with electricity until the MMC plant is commissioned, he said.

Although Fujairah has also studied the possibility of building a coal-fired plant, Ajman is the only emirate to have committed to such a project.

A big drawback of coal-fired plants, especially in areas hoping to attract tourists, is that they are generally unsightly and polluting. In addition, unless they incorporate costly technology to capture carbon dioxide for underground storage, they vent more greenhouse gas emissions to the atmosphere than any other means of producing electricity.

A further drawback for the region in general is a lack of coal supplies. The closest source of imports would be India or South Africa. Nonetheless, several other Gulf states including Saudi Arabia, Oman and Bahrain have also been assessing coal-fired power generation to address the increasingly severe electricity shortages afflicting every GCC country except Qatar.

Burgeoning populations and rapid industrial expansion in the region have been driving up electricity demand much faster than forecast before soaring crude prices triggered a regional economic boom. Most oil-producing Gulf states have not developed their often substantial gas reserves fast enough to keep pace with increasing domestic demand, especially from the power sector.

Qatar, the exception, has forged ahead with development of the world’s biggest gas field, located off its coast. While making domestic gas supply a priority, the emirate has also become the world’s leading exporter of liquefied natural gas (LNG).

To address the worsening regional power crunch some Gulf states, including the UAE, are considering building nuclear plants. But nuclear programmes take years to develop, and the UAE does not expect its first atomic power plant to be completed until at least 2016.

Around that time, the emirate of Abu Dhabi, which produces 90 per cent of the UAE’s oil and gas, also expects to bring at least one major new gas project on-stream, tapping the Shah sour gas field that Abu Dhabi National Oil Company agreed to start developing with ConocoPhillips.

But construction of Ajman’s coal-fired plant should take only 40 months, WAM said.
Under the terms of the deal, MMC would finance construction and operate the plant for 20 years, sharing profits with Ajman.

tcarlisle@thenational.ae