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DEWA dismisses summer power shortage fears

DEWA, which has sole responsibility for transmission and distribution of power and water supply in Dubai, signals that there is no short-term plan for any new bond issuance.

The state-owned utility had planned to build a 1,500 megawatt coal-fired power plant to cut the emirate’s heavy reliance on a steady supply of imported gas. But now it is considering doubling the size of coal-fired power station to 3,000MW. “I can assure you there will be no power shortage for the next five years,” Al Tayer told reporters on the sidelines of a news conference, which was held to discuss WETEX 2012.

“Dubai has enough power and enough desalinated water for the next five years,” Al Tayer said, adding that the emirate is expected to have around 10,000MW of power production capacity by the end of the year.

The emirate wants to diversify sources of power and improve efficiency over the next two decades to ensure its long-term energy supply. Dubai aims to generate 70 per cent of its power from natural gas and the rest from coal, nuclear energy and renewable sources. An annual production capacity of 10,000MW of power and 400 million gallons of water will be sufficient for the emirate over the next five years, he said.

Last year, the emirate, which is home to around two million people, consumed around 33,000 gigawatt hours of power. Tayer sees demand to increase again in 2011. “I expect five per cent of growth but then it could be seven per cent,” Al Tayer said, adding: “The peak demand [growth] last year we thought would be six per cent and then it came 9.6 per cent.”

DEWA chief executive said the utility has no plan to issue bonds in near future despite planned double size of it’s coal-fired power plant.

“For the time being, there is no plan to issue new bonds,” Al Tayer told reporters at the news conference.

DEWA tapped global debt markets twice in 2010 and got very good response in heavily oversubscribed bond sales. The state-utility received a ‘BBB minus’ rating with a stable outlook from Standard & Poor’s this week, the lowest investment grade rating on the S&P’s scale.

The Government of Dubai and Emirates airline, taking the advantage of returning confidence in the UAE, have issued bonds this month and received very good response.

abdulbasit@khaleejtimes.com