Abu Dhabi Water and Electricity Authority (ADWEA) has agreed to sell a 54 per cent stake in Fujairah's biggest power and water development to its publicly traded investment unit, Abu Dhabi National Energy Company (Taqa), for Dh1.11 billion (US$302 million) - roughly 10 per cent of the project's Dh10.28bn construction cost. According to a statement filed with the Abu Dhabi Securities Exchange (ADX), ADWEA has approved the transfer to Taqa of 90 per cent of its shares in its wholly owned Fujairah Water and Electricity subsidiary, which indirectly owns 60 per cent of the Fujairah 2 power and water project. The transaction would not alter ADWEA's debt obligations to the project, the statement noted. The Fujairah 2 development, which will have 2,000 megawatts of electricity generation and 492 million litres per day of water desalination capacity when completed next year, is one of the biggest projects that ADWEA has commissioned in the 11 years since Abu Dhabi reorganised its power and water sector to allow some private-sector ownership. In 2007, the government-owned ADWEA formed a consortium with International Power from the UK and Marubeni of Japan to develop the project, which would supply electricity and water to the emirates of Fujairah and Abu Dhabi. Under terms of the joint venture agreement, International Power and Marubeni would operate the plant. Most of the project's costs were to be financed through $2.23bn of long-term bank loans to the consortium. With ADWEA continuing to service the project's long-term debt, the equity transfer would be "an amazing deal" for Taqa, said Douglas Caskie, the president of IPA Energy & Water Economics, an Abu Dhabi consulting firm. "I guess the game plan here is to increase the portfolio and market capitalisation of Taqa," he said. ADWEA owns 75 per cent of Taqa's shares, with the remainder being widely held. Since its creation in 2005, Taqa has spent about $24bn on acquisitions of oil, gas and electricity assets around the world. The company also owns majority stakes that it inherited from ADWEA in a number of Abu Dhabi power and water projects. On the ADX yesterday, Taqa's shares closed at Dh1.77, down 3 fils. The stock is 57 per cent off its 52-week high of Dh4.12. Taqa did not respond yesterday to requests for further information on its deal with ADWEA, and did not issue a press release. ADWEA officials also could not be reached for comment. In a separate development, Dolphin Energy said it was exploring options to ensure the gas pipeline under construction from Abu Dhabi to the Fujairah 2 power project was completed on time. The pipeline is being laid by Stroytransgaz of Russia, but Dolphin, an Abu Dhabi-based energy company, said it was "aware of normal construction delays" and was committed to delivering it on time in 2010. tcarlisle@thenational.ae