South Korea’s Hanjung has been selected as the preferred bidder for the Fujairah desalination and power project, the UAE Offsets Group (UOG) said yesterday. The $1 bn project will initially be funded by the Abu Dhabi government and should be completed within two years.

The UOG said it would hold detailed negotiations with Hanjung over the next few weeks in order to reach agreement on technical and commercial issues. Earlier this year, Hangjung was renamed Doosan Heavy Industries & Construction.

UOG is also continuing negotiations with the two other bidders; France’s Sidem, and Italy’s Fisia Italimpianti, a UOG press release said. It added that Hanjung’s earlier bid of AED 2731 million ($744 million) to build a 100 million gallons a day (mg/d) desalination plant and a 218 MW power had been superseded by a new proposal to build 500 MW of net power output, in addition to the plant’s internal consumption of 120 MW, for AED 2858 million ($778 million).

The project also calls for the construction of a 185-kilometre water transmission pipeline to Al Ain, as well as a 25-kilometre link to Dhaid. Bids for the pipeline package came in on 30 May and are currently being evaluated.

The project is designed to ease water shortages in the region and is part of the offsets programme of the UAE, under which arms companies are required to invest part of their profit in development ventures. As part of the privatization process the government will seek a private sector partner to take up to 49 per cent who will operate and manage the facilities.