Sumitomo to Buy 20% of U.A.E.'s Power, Water Project

By Megumi Yamanaka and Michio Nakayama

Sept. 4 (Bloomberg) -- Sumitomo Corp., Japan's third- largest trading group, agreed to buy a 20 percent stake in a water and power project in the United Arab Emirates to tap growing demand in the Middle Eastern country.

The Japanese trader will also purchase half of a venture that operates and maintains the power and desalination plant in Shuweihat, west of Abu Dhabi, the company said in a statement on its Web site.

The deal would be the second water and power project in the Middle East for Sumitomo, which plans to double its overseas generation capacity by the year ending March 2011. It now has 3,000 megawatts of power generation assets outside Japan.

Under the project, known as Shuweihat S1, the Japanese trader will operate the facility that generates 1,500 megawatts of electricity and processes 460,000 metric tons of water a day, together with the U.K.'s International Power Plc.

Abu Dhabi National Energy Co. and Abu Dhabi Water & Electricity Authority will keep majority control of the project, owning 60 percent, and Sumitomo and International Power will hold 20 percent each, according to the statement.

To contact the reporters on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net; Michio Nakayama in Tokyo at mnakayama4@bloomberg.net.