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Dewa’s First Private Power Project to Free Up Funds

DUBAI - The decision by Dubai Electricity and Water Authority to invite international developers to build power and water plants for the first time will free up the utility’s funds for other investments, a senior official said on Wednesday.

The introduction of the independent water and power plant (IWPP) model to build new power and seawater desalination plants in Dubai “frees up funds” for other Dewa investments, said Saeed Al Tayer, chief executive of the Dubai Electricity and Water Authority (Dewa).

Dubai’s first private sector IWPP will be located at the Hassyan site on the border with Abu Dhabi and comprise a 1,500-megawatt power and 120 million-gallon-a-day desalination complex, said Al Tayer, who is also Dewa’s 
managing director.

Dewa has issued a tender seeking consultants to advise it on the construction and development of the Hassyan power plant by February 22.

Dewa expects to issue a tender for power and desalination plant in the second half this year and to award a contract in 15 to 18 months from now, Waleed Ali Ahmed Salman, vice president of business development at DEWA told newswire Bloomberg.
 Three previous tenders for the Hassyan project failed to find a bid that Dewa considered attractive.

In the past, Dewa has tapped debt markets and export credit financing to meet its own spending needs. The utility is turning to private funding for future power and water projects after international credit ratings agencies downgraded it last year over concerns that the Dubai government may not back state company’s debt obligations.

“The main advantage of the IWPP is varying in areas related to project timeframe, generation cost, financing resources, efficiency and reliability and transfer of knowledge,” Al Tayer said.

Apart from freeing up funds, the launch of private power project will also reduce risks during construction, commissioning and maintenance and operation, he added.

Al Tayer said the launch of IWPPs in the emirate will require the introduction of new legislation to cater for private sector participation in the power and water sectors. The projects will be overseen by a recently established, independent regulator for the electricity and water sectors that will fall under the auspices of the Dubai Supreme Council of Energy.

“The regulation will provide security for both parties and will lower the risk for IWPP participants,” Al Tayer said. To date, Dubai’s power and water sector has been government-owned and operated, with plants handed over to the public sector after construction.

Dewa is also seeking to issue a new bond in the second-quarter of 2010, Tayer said. He declined to give details of the size of the debt issue or how the cash would be used.

—issacjohn@khaleejtimes.com

With inputs from agencies.