Saudi-based Acwa Power has entered into an agreement with Sumitomo Global Management Corporation, a subsidiary of Sumitomo Corporation, to acquire its 20 per cent stake in a UAE project.

Acwa will buy the stake in Shuweihat CMS International Energy Company (Scipco), which owns Shuweihat S- 1 project for the production of electricity and desalinated water. It will also buy Sumitomo's 50 per cent stake in Shuweihat Limited Company for Operation and Maintenance (SOMLP), a Saudi Press Agency report said.

The value of the transactions has not been revealed.

The Shuweihat 1 project has a capacity to produce 1,500 MW of electricity and 100 million gallons of desalinated water, equivalent to 454.2 thousand cu m per day. It is located 250 km southwest of Abu Dhabi. It is the third independent project for power generation and the production of desalinated water in Abu Dhabi.

The project began commercial operation in 2005, using the combined cycle technology.

Scipco is 60 percent owned by Abu Dhabi National Energy Company (Taqa) and its parent company, Adwea. The remaining 20 percent is owned by International Power/GDF Suez. The plant is managed, operated and maintained by SOMLP (jointly and equally owned by Sumitomo and International Power/GDF Suez) pursuant to a 20-year operations and maintenance agreement.

Acwa Power chairman Mohammed bin Abdullah Abunyan said the agreement represents a milestone for the company. The company already has a presence in Saudi Arabia and Oman.

Acwa Power was established in Saudi Arabia with a capital of SR5.33 billion ($1.421 billion) by eight Saudi companies in addition to two governmental bodies, Sanabel Company for Direct Investments, which is the investment arm of the Public Investment Fund, and Public Pension Authority.

The company is a developer, investor, owner and operator of power plants and desalinated water production with a contracted capacity amounting to 15,979 MW of electricity and 2.4 million cu m of desalinated water per day. Its total investments exceed SR86.25 billion.