Dubai opens sector to private firms

Dubai The government of Dubai has amended Decree No 1 of 1992 establishing the Dubai Electricity and Water Authority (Dewa) to facilitate the participation of the private sector in power generation and water desalination, Dewa said in a filing to Nasdaq Dubai yesterday. "The Decree has been amended in order to allow for the development of independent water and power plants [IWPPs] in the Emirate of Dubai as part of an IWPP programme," the Dewa statement said. In conjunction with the Dewa Decree Amendment, Law No (6) 2011 (the Enabling Law) has been created to regulate the participation of the private sector in electricity and water production. The new law specifies regulations applicable to both public and private entities in electricity generation and water production. The Dewa Decree Amendment, in effect, has suspended Dewa's exclusive right to generate electricity and produce/treat water. Following the amendment, the utility can develop independent power and water projects on a limited recourse basis in association with third parties or on its own. Dewa will, however, remain the sole buyer of electricity and water from third party producers. Dubai's first IWPP is a proposed 1,500-megawatt power generation and desalination plant in Hassyan. Dewa has been working on the plan since 2008 and in last March it invited companies to bid for the project. "The IWPP model adopted by Dubai is a closely supervised model in which private participants' role will be limited to power generation and water production and Dewa will be the sole buyer of their output," said an analyst. The projects's contract is expected to be awarded by the end of this year to pre-qualified bidders such as Korea Electric Power Corporation and Abu Dhabi National Energy, Japan's Mitsui, and France's GDFSuez. HSBC is advising the $1.5 billion (Dh5.5 billion) first-ever private investment in water and electricity production in Dubai. Bankers said the project's initial funding is expected from banks and Dewa will work with bidders to secure financing. With its improved credit profile, analysts said securing finance will not be a problem for Dewa. Last week, credit rating agency Standard and Poor's raised the rating of its $1.3 billion senior secured callable floating-rate notes to BBB. Dewa repaid Dh5.4 billion of debt in April, including a prepayment of the October Dh2.7 billion debt obligation under its syndicated loan, with proceeds of medium-term notes issued in 2010. From / Gulf News