The Gulf Arab state of Qatar established on Wednesday a private sector firm that would carry out a $700m water and power project, the official news agency QNA reported.
Emir Sheikh Hamad bin Khalifa al-Thani issued a decree for the establishment of Ras Laffan Electricity Company Ltd, QNA said.
US firm AES Energy will hold a 55 per cent stake in the venture, while majority privately-owned Qatar Electricity and Water Company will hold a 25 per cent stake, officials have said. The rest of the equity will be equally held by state-run Qatar Petroleum and Kuwait-based Gulf Investment Corp.
The plant is planned to generate 430 MW of electricity from mid-2003, subsequently rising to 750 MW within three years, and produce 182 million litres a day of water by desalination.
Of the $700m cost, 70 per cent will be financed by a syndicated loan.
Qatar General Electricity and Water Corp (Kahramaa) will purchase output under a 25-year agreement; a regulatory body set up last July to replace the ministry of electricity and water.
Qatar has said Kahramaa would operate on a commercial basis, eventually abolishing subsidies. Qataris are exempt from power and water charges, while expatriates and commercial establishments pay a highly subsidised tariff.
Qatar is moving rapidly to privatise the generation of power to cut costs and improve efficiency.