CMS Energy Inc, a US power provider, said it has won a $1.6 billion contract with the UK's International Power, Europe's largest independent electricity producer, to build a power and water desalination plant in the UAE.

The two companies will take a 40 per cent stake in the 1,500 MW plant, the third and largest power project Abu Dhabi has opened up to private ownership.

"This is our second project in the UAE and we hope to see further contracts signed in the Middle East in the near future," said Kelly Farr, CMS Energy spokesman. Financing for the project is expected to be completed in November, he added.

Dearborn, Michigan-based CMS and London-based International Power will share equally in their stake in the plant, which will be built at Shuweihat, 156 miles southeast of Abu Dhabi city, Farr said.

The two companies will operate and maintain the plant for 20 years.

The state-controlled Abu Dhabi Water & Electricity Authority will own the remaining 60 per cent. The plant, the first of three planned at the site, will also produce 100 million gallons a day of desalinated water, Farr said.

Construction is expected to begin early next year and end in 2004, Farr said.