Business | General
Dewa could revive bond issue efforts
Utility provider planned to raise $2.5b last year.
- By Shakir Husain, Staff Reporter
- Published: 00:53 March 6, 2008
Dubai: Dubai Electricity and Water Authority (Dewa) could revive its efforts to raise money through a bond issue this summer after it shelved similar plans late last year due to high borrowing cost.
The government-owned utility needs billions of dollars to fund generation, transmission and distribution projects to match Dubai's growing water and power requirements.
Dewa plans to issue bonds to secure long-term funding and is currently seeking short and medium term loans, Dewa managing director and chief executive officer Saeed Mohammad Al Tayer said.
He said Dewa consultants and financial experts believe credit market conditions could improve after June. The financial market turmoil made it costly to borrow money from banks. Dewa had planned to raise $2.5 billion in Islamic and conventional bonds last year.
Asked if Dewa would launch a bond issue after June, Al Tayer said: "If the market recovers, why not?"
In the meantime, Dewa is using various options, including internal cash flow, to fund its projects, he said, but declined to say how much the utility needs for financing its projects.
The ongoing construction boom and growing population in the UAE and other places in the Gulf are fuelling demand for electricity and water.
"Dubai faces the biggest new-build programme, with both power and desalination capacity forecast to triple in size to 16,000MW and 800 million gallons per day by 2015," according to MEED.
Across the Gulf, 60,000MW of new capacity, representing 80 per cent of current installed capacity, will be required by 2015, while desalination capacity will have to double to over 5,000 million gallons a day to meet projected demand, it said.
MEED said based on 2007 unit costs, the GCC power sector will require about $50 billion of investment in new power generating capacity and $20 billion in desalination by 2015.
Industry sources expect Dewa to spend $16 billion on generation, transmission and distribution projects in the next five years.
Dewa plans to invite bids in August for a 3,000 megawatt power plant in Jebel Ali.
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