Dubai: A price increase for Dubai utilities earlier this year and a new fuel surcharge have earned the Dubai Electricity and Water Authority (Dewa) an upgrade by ratings agency Moody's.
The agency yesterday upgraded Dewa from Ba2 to Ba1, pointing to good liquidity and expectations of growing profits for the authority.
Moody's lead analyst Franck Nowak told Gulf News that the 15 per cent rise in water and utility base rates — which was introduced in January — as well as the fuel surcharge had led to a more bullish ranking on the company.
"Dewa [will] monitor the fluctuating fuel prices continuously, and the increase or decrease in the prices would be reflected in monthly bills. These two tariff modifications have brought and will continue to bring incremental revenues to Dewa," he said.
In a statement sent to media earlier, Moody's said: "Dewa is expected to improve its credit metrics as a result of growing revenues and cash generation, thereby reducing volatility in operating performance.
"The growth can be attributed to the recent tariff increase and the introduction of a surplus charge."
Dewa is experiencing excellent results so far in 2011. The company reported consolidated revenues of Dh6.6 billion for the first six months of the year.
Last week, Gulf News reported the concerns of readers about increases in power and water tariffs, a claim that was quickly refuted by Dewa officials.
Saeed Al Tayer, managing director and chief executive officer of Dewa, told Gulf News: "Prices for water and power in Dubai have not increased since being revised in January."
In January, water and power rates were increased by about 15 per cent in addition to the fuel surcharge.
"The 15 per cent increase in water and electricity tariffs had to be adopted in accordance with the ongoing increase in the fuel and gas prices on the global market," Al Tayer said.
