Abu Dhabi has awarded a contract to build a $2.8 billion power and water desalination plant to the UK's International Power and Japan's Marubeni, an IP executive said.

'We signed the agreement with Abu Dhabi Water and Electricity Authority (ADWEA),' Ranald Spiers, IP's regional director, said.

The Fujairah 2 power plant will produce 2,000 megawatts of power and around 130 million gallons per day of water and is expected to start up in 2010, IP said in a statement.

IP and Marubeni signed a 20-year deal to operate the plant jointly and supply all the power and water to ADWEA.

IP's equity investment in the project will be $112 million, the company said. The project funding will be 80 per cent debt and 20 per cent equity.

The plant will be 60 per cent-owned by ADWEA and Abu Dhabi National Energy, Spiers said. IP and Marubeni will each own 20 per cent stakes.

ADWEA forecasts that it requires around 1,500 to 2,000 MW of new capacity per year over the next 15 years to meet rapidly growing demand from a petrodollar-fuelled economic boom.

Abu Dhabi's power generation capacity will edge up to 8,367 MW by the end of 2007, up from 8,312 MW at the end of last year. The total includes power from an existing generation plant in the emirate of Fujairah which supplies Abu Dhabi.

Water capacity will rise to 629 million gallons of water per year by the end of the year.

The Fujairah plant will be Abu Dhabi's sixth independent power and water plant (IWPP). Last month, ADWEA invited bids from at least 20 international firms for a seventh IWPP to be built at Shuweihat.